Blackstone’s aggressive approach on India’s outsourcing nets it first catch MphasiS

With the west looking to save precious monies by cutting costs, India’s IT sector is increasingly being tapped.

In a deal that marks the Blackstone Group’s biggest investment in India, the world’s biggest asset management company is all set to acquire Hewlett Packard Enterprise Co’s stake in MphasiS Ltd, a midsized Indian IT outsourcing provider. The deal could cost Blackstone up to $1.1 billion.

The deal only goes to underline Blackstone’s bullish outlook on the Indian outsourcing business, with scores of western companies sending IT related jobs to India in a bid to cut costs. Just last December, Blackstone had announced the purchase of a minority stake in IBS Software, an Indian software company, for $179 million.

This has turned out to be one of the biggest M&A in India’s $150 billion outsourcing sector. Blackstone will pay $6.49 per every share for the 84% stake held by HP Enterprise Co.

As per provisions of the Indian Company’s Act, Blackstone was also compelled to make an open offer to purchase the remaining 26% from public shareholders at INR 457.54 a share.

Depending on the response it receives from the public, this acquisition could vary between 54..66 billion rupees to 70.71 billion rupees ($825 million to $1.1 billion).

Sources had earlier mentioned that Blackstone was in the lead in the auctioning of HPE’s stake in MphasiS. HPE is looking to exit from its Indian venture to shore up its capital.

Blackstone’s aggressive approach on India’s burgeoning outsourcing is also shared by others. Case in point: in February, Singapore based wealth fund, GIC Pte along with private equity investors Bain Capital and Advent International had joint purchased a minority stake in QuEST Global Services, an outsourcing firm, for $350 million.

A few weeks earlier, Geometric Ltd, an Indian company had mentioned that it will sell its IT services business to HCL Technologies Ltd for 12.37 billion rupees, in an all-stock deal.

 

 



Categories: Economy & Finance, Entrepreneurship, Strategy

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