Blackstone buys 55% in CMS

Carves out two divisions to form new firm worth Rs 550 cr.

The Blackstone Group has taken a majority stake in Mumbai-based CMS Computers and formed a company by carving out its IT infrastructure management and outsourced business services division. The new company's valuation is estimated to be around Rs 500-550 crore.

Blackstone is understood to have taken slightly less than 55 per cent stake, and Rajiv Kaul who has been appointed as executive vice-chairman and CEO is understood to have taken a minority stake of around 5 per cent. Kaul, till recently, was a global partner with Actis Capital LLP, based in London. Prior to that, he was with Microsoft for over 10 years. His last assignment at Microsoft was as senior director for emerging markets including BRIC based in Redmond, the US.

CMS was founded in 1976 by Ramesh Grover, along with Varun Prasad and S Ramadorai. It is currently one of the top 5 IT infrastructure management companies in India. The promoters, primarily the Grover family, will hold a substantial minority stake in the new company which will have over 10,000 employees. After the formation of the new company, the Grover family will continue to manage the remaining businesses within the CMS Group, viz Systime (its global software solutions unit), CMS e-governance, CMS traffic systems, access, security, energy and broadcast systems.

Ramesh Grover, chairman, CMS Group, said: “Having brought CMS Group to current leadership levels, we realised that enhanced level of corporate governance through professional management together with private equity participation, is critical to take CMS to the next level.”

This will be Blackstone’s second investment in India’s IT sector.

Last year, the PE player had acquired 80 per cent stake in the Mumbai-headquartered BPO firm Intelenet Global Services.

Akhil Gupta, chairman and senior managing director of Blackstone Advisors India, said: “We are enthusiastic about this investment as we believe CMS is a market leader and well-positioned to capitalise on the growth opportunity in the IT infrastructure and the outsourcing services market in India.”