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Transaction Analysis
Blackstone Nears Acquisition of HP Enterprise Stake in MphasiS
Financial Information*
- HPE Ownership Stake 60.5%
- Value of HPE Stake $940 million
- MphasiS Total Market Value $1.6 billion
Transaction Facts
- According to recent media reports, Blackstone Group LP (NYSE:BX) is nearing a deal to acquire Hewlett Packard Enterprise (NYSE:HPE)'s 60.5 percent ownership stake in Indian IT outsourcing provider MphasiS Ltd.
- None of the involved firms commented on this story, but it has been an open secret for some time that HPE has been soliciting bidders to raise capital. News of a potential transaction first broke in January when it was reported that HPE hired Citigroup to oversee an auction process.
- According to the sources, acquisition terms have not yet been finalized but a pact on the deal could be signed by early April.
A Big Deal With a Long History
- A Background Stretching Several Companies: This investment dates back to 2006, when Electronics Data Systems Corp. (EDS) acquired a majority stake in MphasiS citing increased offshore delivery capabilities and a better ability to serve its clients. Hewlett-Packard entered the scene in 2008 when it acquired EDS and operated MphasiS as an independent HP subsidiary. Today, following HP's split, the stake is owned by HP Enterprise and HPE clients account for 24 percent of the firm's total revenue (down from 65 percent five years ago).
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 Large Foreign Investments In the Spotlight: This transaction would be one of the largest M&A deals to take place in India's $150 billion outsourcing sector. It would join several recent foreign investments in the space, such as Bain Capital, Advent International and Singapore sovereign wealth fund GIC Pte's acquisition of a minority stake in QuEST Global Services, an Indian outsourcing firm.
- Unlocking Value Through PE Ownership: Founded in 2000, MphasiS has long been limited in its ability to achieve its highest potential value creation thanks to its history of external ownership. A PE firm such as Blackstone (said to have outbid Apollo Global Management) will be able to invest significant resources in the company, capitalizing on growth opportunities and leveraging the firm's current management structure.
For more information about this transaction,
click here to read a report in Reuters.
martinwolf was not the advisor in this transaction.
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With offices in the San Francisco Bay Area, martinwolf is a leading M&A Advisory focused on middle market companies in the IT Services, IT Supply Chain, IT-Enabled Business Process Outsourcing and Software as a Service (SaaS) space. Since 1997, our team has completed more than 140 transactions in nineteen countries and sold seven divisions of Fortune 500 companies. The firm is also a presenting sponsor of the Global IT M&A Forum. martinwolf is a member of FINRA and SIPC. For more information, visit www.martinwolf.com. To learn more about martinwolf, contact Matthew Putzulu at [email protected]. © martinwolf 2016 |
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