Blackstone to invest $2.8 bn in Mphasis

Bengaluru: Global private equity major Blackstone on Monday said funds managed by the PE firm has entered into a definitive agreement to buy majority stake in IT services firm, Mphasis. As part of the deal, it has made an open offer to acquire additional 26 per cent stake in the mid-tier IT services firm Mphasis Ltd for Rs 8,262 crore (around $1.10 billion).

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 GIC will co-invest along with Blackstone. The offer price is fixed at Rs 1,677.16 per share, which is around three per cent less than the market price of Mphasis' share on Monday. In total, Blackstone has committed up to $2.8 billion to acquire a controlling stake in Mphasis.

Currently, Blackstone's another fund Marble II Pte Ltd holds 56 per cent stake in the mid-tier IT services firm. As per the proposed structuring of the deal, two funds of Blackstone- Blackstone Capital Partners Asia and NQ LP and Blackstone Capital Partners (CYM) VIII AIV along with ADIA, GIC and UC Investments will acquire up to 55.31 per cent stake from current promoter Marble II Pte Ltd. According to market regulator Sebi regulations, this acquisition will trigger a mandatory open offer under which these funds plan to acquire an additional 26 per cent in Mphasis. However, the total shareholding of these funds post open offer (assuming all shares are tendered) will be around 82 per cent after completion of this transaction.

"As any publicly listed firm has to maintain 25 per cent public shareholding, the purchase of stake from Marble II Pte will vary depending on the 75 per cent threshold level. If the open offer is fully subscribed, then purchase of shares from Marble II Pte Ltd will be lower to meet the 25 per cent public float norm," said a company source. In the exchange filing, Mphasis also said that Marble II Pte will be reclassified as public shareholder with no board position and having no power to appoint key managerial personnel in the Bengaluru-headquartered company.