International investment firm Blackstone, has announced that the private equity funds it manages are entering an agreement with Hewlett Packard Enterprise to become the majority stakeholders of Mphasis. HP’s Mphasis based in India is an IT services provider offering Applications, Business Process Outsourcing and Infrastructure Services. HP owns 60.5 per cent of Mphasis’ stakes and according to industry reports Blackstone will be paying somewhere between $825 million to $1.1 billion to buy HP’s 60.5 per cent in the Bangalore Based IT services company.
Formed in June 2000, Mphasis Limited was a merger between the US based IT consulting company Mphasis Corporation and the Indian IT services company BFL Software Limited. American Banker and Bank Administration Institute recently named it as one of the top companies in FinTech. The Economic Times in India named it the Most Distinguished Digital Company in 2015.
Mphasis has deep vertical expertise in Banking, Financial Services and Insurance (BFSI) sector and strong portfolio focus on New Generation Services including Digital solutions. Mphasis serves marquee customers across the globe including 6 top global banks, 11 out of 15 top mortgage lenders, and 3 top global insurance companies. The company has roughly 24,000 employees across 16 countries.
Blackstone has been investing in India since 2005 and has committed to investments over $6 billion in private equity and real estate. This deal represents the largest acquisition by Blackstone in India. It will be paying a purchase price of INR 430 per share to Hewlett Packard Enterprise and according to the Indian acquisition and takeover laws. The sale is expected to complete in the coming months, subject to customary closing conditions and approvals.
“We are impressed by Mphasis’ strong domain expertise in Banking, Financial Services and Insurance vertical. Its deep relationship with marquee global customers has enabled it to deliver growth above the industry average in its Direct International segment. 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 company’s growth. With a long-term commitment of company’s largest customer, HPE, we are confident that Mphasis will scale new heights,” says Amit Dixit, Senior Managing Director and Co-Head of Private Equity in India at Blackstone.
Apart from the fact that Mphasis will be included in Hewlett Packard Enterprise’s Prffered Provider Program, HPE and Blackstone have agreed on the terms of a Master Services Agreement. This will be signed between HPE and Mphasis. The duration of the 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 YoY and totaling $990 million over the next five years.
