Private equity firm Blackstone has entered into a definitive agreement with Hewlett Packard Enterprise to buy a majority stake in Mphasis Ltd, an Information Technology services provider offering Applications, Business Process Outsourcing and Infrastructure Services.
Based on the open offer subscription, the purchase price consideration will vary between Rs 5,466 crore and Rs 7,071 crore. This deal represents the largest acquisition by Blackstone in India.
HPE currently owns 60.5 per cent of Mphasis. Blackstone will pay a purchase price of Rs 430 per share to HPE. Since Mphasis is listed on the National Stock Exchange and the Bombay Stock Exchange, this transaction will trigger a mandatory open offer for a purchase of additional 26 per cent shares.
HPE and Blackstone have agreed on the terms of a Master Services Agreement (MSA) which HPE proposes to sign with MphasiS, post approval by Mphasis’ board of directors and shareholders. The duration of MSA is five years with three automatic renewals of two years each.
Under this MSA, HPE has proposed to commit a minimum revenue amount escalating year over year and totaling $990 million over the next five years. Also, MphasiS will be included in HPE’s Preferred Provider Program opening up significant additional revenue opportunities.
Mphasis’ last 12 months revenue as of December 31, 2015 was Rs 5,999 crore. The company has roughly 24,000 employees across 16 countries.
The sale is expected to complete in the coming months, subject to customary closing conditions and approvals.
Amit Dixit, Senior Managing Director and Co-Head of Private Equity in India at Blackstone, said: “We see large potential going forward driven by Mphasis’ world-class delivery capabilities and its access to Blackstone’s portfolio of companies across the globe. The company has an experienced management team who has a clear roadmap for the company’s growth. With a long-term commitment of company’s largest customer, HPE, we are confident that MphasiS will scale new heights.”