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ADIA, UC Investments and other long-term investors to co-invest

Transaction will trigger open offer for acquisition of up to 26% stake at a price of Rs 1,677.16 per share

Blended purchase price to be Rs 1,452 per share to Rs 1,497 per share, depending on subscription in the open offer

A wholly-owned subsidiary of the Abu Dhabi Investment Authority (ADIA), UC Investments (Office of the Chief Investment Officer of The Regents, University of California) and others will co-invest along with Blackstone

 

Mumbai, NFAPost: Blackstone announced that private equity funds managed by Blackstone have entered into definitive agreements to acquire a majority stake in Mphasis Limited (NSE: MPHASIS).

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

Mphasis is one of the leading providers of Information Technology services specializing 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. Mphasis also has long-term relationships with multiple marquee global customers.

Total contract value

Mphasis is witnessing strong momentum on new business wins and has delivered its highest‐ever quarterly Total Contract Value (TCV) wins in each of the last three quarters: Direct TCV wins have increased 64% YoY for the nine-month period ending December 31, 2020.

Blackstone Private Equity Co-Head of Asia Acquisitions and Head of India Amit Dixit said 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. 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 Amit Dixit.

Management team

Amit Dixit said the investment enables the company 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. “We are grateful to Mphasis’ customers, investors, employees and board for their continued support,” said Amit Dixit.

Mphasis CEO and Executive Director Nitin Rakesh Mphasis is  gratified to continue its partnership with Blackstone, both as a leading investor as well as client.

“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,” said Nitin Rakesh.

Satish Swamy, Senior Managing Director Asia and Global Rates, UC Investments (The Regents of the University of California), said, Blackstone has an exceptional team and franchise in India.

Flagship investment

“An ownership mindset with a business building approach has led to many successful investments including its flagship investment in Mphasis. We have known the company and the management team for a few years and are delighted to now become investors. At UC Investments, we invest as partners with a long-term mindset in companies with secular tailwinds — Mphasis perfectly fits that bill,” said Satish Swamy.

This transaction will trigger a mandatory open offer for the purchase of up to 26% 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 (12-16% premium to 12-month average price and 3-6% discount to 6-month average price) and the purchase consideration will vary between Rs 15,200 crore  billion to Rs 21,000 crore (or, approximately $2.0 billion to $2.8 billion). A different fund managed by Blackstone had acquired a controlling stake in Mphasis from Hewlett Packard Enterprise (NYSE: HPE) in September 2016.

Regulatory approval

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

Mphasis applies next-generation technology to help enterprises transform businesses globally. Customer centricity is foundational to Mphasis and is reflected in Mphasis’ Front2Back™ Transformation approach. Front2Back™ uses the exponential power of cloud and cognitive to provide hyper-personalized (C=X2C2TM=1) digital experiences to clients and their end customers.

Mphasis’ Service Transformation approach helps ‘shrink the core’ through the application of digital technologies across legacy environments within an enterprise, enabling businesses to stay ahead in a changing world. Mphasis’ core reference architectures and tools, speed and innovation with domain expertise and specialization are key to building strong relationships with marquee clients.

Blackstone is one of the world’s leading investment firms. We seek to create positive economic impact and long-term value for our investors, the companies we invest in, and the communities in which we work.

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