Blackstone to buy majority in CMS

Private equity player Blackstone plans to pick up a majority stake in Mumbai-based IT firm CMS Computers. After the stake sale, CMS Computers will be demerged into two companies.

“Blackstone is investing in the information technology and infrastructure management services business of CMS. The other businesses comprising education, security, traffic management and the rest will be under a different company,” said a source close to the development. 

CMS Computers was set up by three ex-IBM employees — R D Grover, S Ramadorai and V Prasad. The valuation of the services entity, formed in 1976, is estimated at $400 million. Sources claim the company plans to raise Rs 400 crore through this stake sale. It is also learnt that Grover, chairman and managing director, is selling his stake. Another promoter Prasad said, “At this moment, I would not like to say anything.”

CMS Computers has more than 8,000 employees and has presence in four regional centers with 20 branch offices, three research and development centers, three software development centers and numerous support engineers spread across 130 locations in the country.

This will be Blackstone’s second investment in the IT sector. Last year, in one of the biggest ever management buyouts, the PE player had acquired 80 per cent stake in business process outsourcing firm Intelenet Global Services. Blackstone has invested in six Indian companies so far — Nagarjuna Constructions, Gokaldas Exports, Intelent, Allcargo, MTAR and Emcure Pharmaceuticals.