Blackstone buying HPE's majority stake in Mphasis

Global private equity fund Blackstone on Monday announced buying a majority stake (60.5 percent) in Mphasis, a leading IT services player, from Hewlett Packard Enterprises (HPE) in a deal valued between Rs.5,466 crore and Rs.7,287 crore.

"As per the Takeover Code in India, the transaction will trigger a mandatory open offer to purchase the HPE's additional 26 percent shares," Blackstone said in a statement here on the deal.

In a regulatory filing to the Indian stock exchanges NSE and BSE, Blackstone said it would buy HPE's equity holding at Rs.430 per share.

The shares of the city-based Mpasis, however, declined Rs.13.90 or 2.95 percent to Rs.453.60 from an opening price of Rs.472.30 and previous closing rate of Rs.467.20 on the BSE in the post-noon trading.

JM Financial Institutional Securities Ltd is the lead manager for the deal transaction.

Though Blackstone has agreed to buy 84 percent of HPE' stake at Rs.430 per share, it will purchase an additional 16 percent through an open offer from the public, as permitted by the securities laws.

HPE's exit from Mphasis is in alignment reflects its capital allocation priorities and will have not any adverse impact on its commercial ties with the latter.

"While our financial relationship is changing, the business and commercial relationship with Mphasis remains an important part of our service delivery strategy," said HPE enterprise services vice-president Mike Nefkens in the statement.

HPE also plans to renew the service agreement with Mphasis for another five years post-transaction, expected to close in second half of 2016 fiscal.

"We remain committed to our strategic partnership with Mphasis and provide our customers with high level of service and support they expect from us," Nefkens said.

Mphasis' last 12 months revenue as of December 31, 2015 was Rs.59,996 million ($904 million), while net profit was Rs.6,923 million ($104 million).

It has large revenues from banking and financial services and insurance apart from new generation services, including digital solutions.

"Mphasis serves marquee customers across the globe, including six top global banks, 11 out of 15 top mortgage lenders and three top global insurance firms.

The company has about 24,000 employees across 16 countries the world over," the statement added.