MphasiS to raise $20 m debt for buy-back

MphasiS BFL, the Rs 900 crore software and BPO solutions firm, is planning to raise a debt of $20-$25 million in the near future to fund the proposed buyback of its shares in the next fiscal.

The company on Tuesday said that it is restricting its buy-back plan to up to 10 per cent of its shares.

Said Alok Mishra, CFO, MphasiS: "Our current valuation is in the range of $400 million and we would need approximately $40 million for the 10 per cent we are planning to buy back. A part of this will be met by debt which we are planning to raise and the remaining will be from internal accruals." MphasiS has $8 million cash reserves.

"The buy-back is expected to be closed during April-May 2006 and the reason for restricting it to a maximum of 10 per cent is to hasten the process as more than 10 per cent of the buy back will take a longer duration," noted Mishra.

He added that the buyback is being planned as MphasiS seeks to lower its floating stock.

This had been raised recently for acquisitions and also a 1:1 bonus issue.

MphasiS had used a blend of stock and cash for the recent acquisitions of Princeton Consulting, Eldorado and Kshema Technologies.

The company has been in the news in the recent past over the leakage of customer data from its business process outsourcing (BPO) unit, the failed exit of its principal investor Barings, and the reported pulling back of 1,000 people from the services of BPO client Abbey Bank of UK.

The company posted a net profit of Rs 40.16 crore, up by 27.4 per cent for the quarter ended September 30, 2005, compared with Rs 31.51 crore for the corresponding quarter of the last year.

Total income of the company was up by 20.47 per cent from Rs 191.10 crore in the second quarter of the previous year to Rs 230.22 crore for the quarter ended September 30, 2005.