U.S. private equity fund Blackstone Group is reportedly close to acquiring a controlling stake in Indian IT outsourcing firm MphasiS. Blackstone is currently in talks with Hewlett-Packard for the stake, as the Silicon Valley tech giant came to own stakes in MphasiS in 2008 when it bought IT consulting company Electronic Data Systems.
The value of the purchase has not been released publicly. Some reports say Blackstone will pay $1 billion, while other estimates have put the figure at $940 million. Tech Mahindra and Apollo Global also made bid for MphasiS stake, which was put up for sale earlier this month.
Hewlett-Packard was recently split into two companies: HP Inc. and HP Enterprises. The MphasiS acquisition will fall within HP Enterprises. The report comes months after HP stated it wanted to revamp its IT consulting and services and shore up capital.
Bangalore-based MphasiS provides infrastructure technology and applications outsourcing services, as well as architecture guidance, application development and integration, and application management services. It serves the financial services, telecom, logistics, and technology industries.
MphasiS is not performing well compared to its Indian peers. HP used to contribute 65% to Mphasis’ revenue some five years ago, but that was down to 34% in 2014-15. Nevertheless, its non-HP business has been growing at 20% year-on-year.
These days, the Indian IT outsourcing industry is struggling to maintain its high-speed growth due to the rising popularity for automation and cloud services. But Blackstone seems to have greater faith in Indian IT assets. In September last year, Blackstone repurchased the India-based BPO operations of the UK’s Serco Group Plc for $387 million, four years after selling the unit.
Later in December, the equity investor acquired a minority stake in IBS Software, a South India-based mid-tier IT firm, from General Atlantic for $170 million.
Mphasis was formed in June 2000 after the merger of the US-based IT consulting company MphasiS Corporation and the Indian IT services company BFL Software Limited. In June 2006, Electronic Data Systems (EDS) purchased a controlling stake in it.