Blackstone Is Buying Indian IT Outsourcer MphasiS From HP Enterprise

April 4, 2016, 8:26 AM UTC
Blackstone Group CEO Stephen Schwarzman and CFO Laurence Tosi Attend Opening of Singapore Office
The logo for Blackstone Group LP is displayed during the opening of the company's new office in Singapore, on Monday, Oct. 21, 2013. Blackstone, the world's biggest manager of alternative assets such as private equity and real estate, last week reported that third-quarter profit rose 3 percent as gains in property holdings offset a decline in its buyout unit. Photographer: Munshi Ahmed/Bloomberg via Getty Images
Photograph by Munshi Ahmed — Bloomberg via Getty Images

Blackstone Group is buying Indian IT outsourcing services provider MphasiS from Hewlett Packard Enterprise, in a deal that could cost the U.S. asset manager up to $1.1 billion and be its biggest in the country.

The deal underscores Blackstone’s bullish outlook on the outsourcing business, where western clients send more IT jobs to countries such as India to cut costs. In December, Blackstone (BX) announced the purchase of a minority stake in India’s IBS Software for $170 million.

In what is one of the biggest M&A transactions in the country’s $150 billion outsourcing sector, Blackstone will pay 430 rupees ($6.49) per share for at least 84% of HP Enterprise’s 60.5% stake in MphasiS, it said in a statement.

Under Indian laws, Blackstone also made an open offer to buy a 26% stake in MphasiS from public shareholders for 457.54 rupees a share.

Depending on the response to the open offer, the final price of the transaction will vary between 54.66 billion rupees and 70.71 billion rupees ($825 million and $1.1 billion).

Blackstone was the frontrunner in an auction run by HPE (HPE) for its MphasiS stake, sources had said. HPE had been looking to exit from the Indian venture to shore up its capital, they had said.

The U.S. asset manager is not alone in initiating outsourcing sector deals.

In February, Singapore sovereign wealth fund GIC and private equity investors Advent International and Bain Capital jointly bought a minority stake in outsourcing firm QuEST Global Services for $350 million.

And just last week, India’s Geometric said it will sell its IT services business to HCL Technologies in an all-stock deal valued at 12.37 billion rupees.

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