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Blackstone Seeks Control of MPhasis for Up to $2.8 Billion

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(Bloomberg) -- Blackstone Group Inc. offered to take a controlling stake in Indian IT outsourcing services provider Mphasis Ltd. in a deal worth as much as $2.8 billion, as demand for cloud computing surges amid the pandemic.

Funds managed by Blackstone Capital Partners VIII and Blackstone Capital Partners Asia have teamed up with long-term investors including Abu Dhabi Investment Authority and UC Investments to take a majority stake in Mphasis, the private equity firm said in a statement on Monday. They’re buying a 55.31% stake from Blackstone Capital Partners VI fund.

That agreement triggered an open offer for an additional 26% stake in the Indian firm at 1,677.16 rupees apiece, which amounts to as much as 82.6 billion rupees ($1.1 billion). The offer price is a 1.1% discount to the closing share price on Friday. The stock gained as much as 6.5% in Mumbai after the offer.

Blackstone’s move to increase its stake in Mphasis is in sync with the U.S. asset manager’s plans to boost investment in the South Asian nation. India is the strongest performer in the world for Blackstone and the firm intends to continue deploying large investments in the nation, Blackstone Chief Executive Officer and co-founder Stephen Schwarzman said during his visit to Mumbai in 2020.

“This investment enables us to continue creating value for the long term and provide additional resources to further accelerate the company’s growth momentum,” Amit Dixit, head of India for Blackstone private equity, said in the statement. Mphasis specializes in providing cloud and digital solutions and serves 35 of the top 50 U.S. banking, financial services and insurance firms, according to the statement.

Following the completion of the transactions, Blackstone is aiming to build MPhasis into a company worth $10 billion over the next four years, more than double its current valuation of about $4.4 billion, according to a person familiar with the matter, who asked not to be identified discussing internal targets. A representative for Blackstone declined to comment.

Blackstone had purchased a majority stake in Mphasis in 2016 from Hewlett Packard Enterprise Co., paying 430 rupees per share at the time.

(Updates with details about Blackstone’s plans for Mphasis in sixth paragraph)

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