Blackstone to buy Mphasis from HP
Mayuresh Deshmukh / 04 Apr 2016
Private equity firm Blackstone India has informed on Monday that it has struck a deal with Hewlett Packard Enterprises (HPE) to buy a majority stake in IT service company Mphasis.
Private equity firm Blackstone India has informed on Monday that it has struck a deal with Hewlett Packard Enterprises (HPE) to buy a majority stake in IT service company Mphasis, which will end the buyout battle for the Indian IT firm. HP has 60.4 per cent stake in Mphasis which it is looking to sell through this deal.
Mphasis operates through segments that include Banking and Capital Market, Insurance, Information Technology, Communication and Entertainment and Emerging Industries. The company offers solutions that include Billing as a Service (BaaS), Digital Customer Experience, NextAngles, Protecht, Wyde and HyperGraf. The company is an insurance billing solution provider.
This deal represents the largest acquisition by Blackstone in India, and is the largest private equity transaction in India so far. Blackstone has agreed to pay Rs 430 per share to HP. The deal will automatically trigger an open offer for an additional 26 per cent of the listed Indian IT arm. Based on the open-offer subscription, Blackstone pegged the purchase price at between USD 825 million and USD 1.1 billion.
HP Enterprises has also agreed to sign a five-year Master-Services Agreement (MSA) with Mphasis. Under the MSA, the US company has committed to a minimum revenue amount escalating year over year and totalling USD 990 million over the next five years.
On financial front the consolidated net revenue from operations of Mphasis reached Rs 1517 crores in Q3FY16 compared to Rs 1557 crores in Q2FY16, a decrease of 2.61 per cent quarter on quarter (QoQ). The EBITDA stands at Rs 217 crores this quarter, as compared to Rs 235 crores in Q2FY16, a decrease of 7.58 per cent QoQ. EBITDA margin this quarter stands at 14.29 per cent, as compared to 15.06 per cent in Q2FY16. The net profit stands at Rs 174 crores in Q3FY16 compared to Rs 185 crores in Q2FY16, a decrease of 6 per cent QoQ.
On valuation front the company is trading at Trailing Twelve Month (TTM) P/E of 13.88 compared to industry P/E of 21.68. The stock of company is trading at Rs 457, a decrease of 2.23 per cent from the previous close.
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