Blackstone, which purchased a majority 60.5 percent stake in Mphasis from Hewlett Packard Enterprise Co., for 430 per share in 2016, will buy additional shares for $1,452 to $1,497 per share.
Blackstone said in a statement, “The sale price was 12-16 percent higher than the 12-month average price and 3-6 percent lower than the 6-month average price, with the purchasing consideration ranging from Rs 15,200 crore to Rs 21,000 crore (roughly USD 2-2.8 billion)”.
The Abu Dhabi Investment Authority (ADIA), UC Investments (Office of the Chief Investment Officer of The Regents, University of California), and others will join Blackstone in the investment, according to the statement. Marble II Pte Ltd, a Blackstone-managed fund, owned 56.03 percent of Mphasis at the end of the March 2021 portion.
Marble II Pte Ltd, the current promoter of the target business, will sell up to 1,04,799,577 equity shares, as part of the share purchase agreement signed on Monday, according to Mphasis. This amounts to 55.31 percent of the voting share capital in its extended form.
Moreover, BCP Topco IX Pte Ltd, Blackstone Capital Partners Asia NQ LP, and Blackstone Capital Partners (CYM) VIII AIV FLP have announced an open bid for the purchase of up to 49,263,203 fully paid-up equity shares from Mphasis Ltd’s public shareholders.
At a price of $1,677.16 per equity share, the shares would constitute 26 percent of the increased voting share stock. According to the release, the total consideration for the buyback is approximately 8,262.23 crore. The increased voting share capital applies to the target company’s total voting equity share capital on a completely diluted basis, as of the 10th working day following the close of the open bid tendering period.
According to the filing, there are 23,68,949 outstanding employee stock options that have already vested and can be converted into an equal number of equity shares. It also stated that between the date of the public announcement and August 31, 2021, an additional 59,500 employee stock options would be vested. Subject to customary closing conditions and regulatory approvals, the sale is expected to close in the coming months.
According to Amit Dixit, co-head of Asia acquisitions and Head of India for Blackstone Private Equity, Mphasis is exceptionally well-positioned due to its stellar management team, high order pipeline, long-term strategic customer base, deep domain experience in financial services, and world-class suite of cloud and digital offerings. Additionally, he mentions “With stability in the management team and the board, we will be able to continue generating value for the long term, as well as provide additional capital to boost the company’s growth momentum we appreciate the continued support of Mphasis’ clients, partners, staff, and board”.
Mphasis, which represents 35 of the top 50 US BFSI companies, is experiencing solid new business growth and has delivered its highest quarterly total contract value (TCV) wins in each of the last three quarters. For the nine months ended December 31, 2020, Mphasis’ direct TCV wins increased by 64 percent year over year. Blackstone’s long-term strategic relationship with Mphasis, according to CEO and Executive Director Nitin Rakesh, will help the company boost its growth and reach new heights. He also motioned “Co-investing by sovereign and pension funds is a sign of long-term engagement and a vote of confidence from a powerful group of shareholders”.
