Blackstone commits up to $2.8 billion to acquire controlling stake in Mphasis

Global investment firm Blackstone on Monday announced that private equity funds managed by it have entered into definitive agreements to acquire a majority stake in IT solutions provider Mphasis Ltd.

A wholly-owned subsidiary of the Abu Dhabi Investment Authority (ADIA), UC Investments and other long-term investors will co-invest along with Blackstone.

The transaction will trigger a mandatory open offer for the purchase of up to 26 per cent additional shares of the company from the public shareholders and the acquiring entity has released a public announcement to the stock exchanges.

Based on the open offer subscription, the blended purchase price will vary between Rs 1,452 to Rs 1,497 per share (12 to 16 per cent premium to 12-month average price and 3 to 6 per cent discount to six-month average price) and the purchase consideration will vary between Rs 15,200 crore to Rs 21,000 crore (or about 2 billion to 2.8 billion dollars).

Mphasis is one of the leading providers of information technology services specialising in cloud and digital solutions. It has deep domain expertise in the banking, financial services and insurance sectors (BFSI), and serves 35 of the top 50 US BFSI firms.

"This investment enables us to continue creating value for the long term with continuity in the management team and the board, and provide additional resources to further accelerate the company's growth momentum," said Amit Dixit, Co-Head of Asia Acquisitions and Head of India for Blackstone Private Equity.

Information technology and software services have been strong sectors for value creation for the last two decades. Mphasis is backed by strong secular tailwinds as global enterprises increasingly migrate to the cloud, he said.

"The company is exceptionally well-positioned given a terrific management team, strong order backlog, long-term strategic customer base, deep domain expertise in financial services, and a world-class suite of cloud and digital offerings," said Dixit.

Nitin Rakesh, CEO and Executive Director of Mphasis said: "We believe Blackstone's sustained strategic partnership will help the company accelerate its growth and scale new heights. Sovereign and pension funds co-investing is a testimony of long-term commitment and a vote of confidence of a marquee set of shareholders."

A different fund managed by Blackstone had acquired a controlling stake in Mphasis from Hewlett Packard Enterprisein September 2016.

The sale is expected to complete in the coming months, subject to customary closing conditions and regulatory approvals.

( With inputs from ANI )