MUMBAI: Blackstone Group LP is buying Indian IT outsourcing services provider MphasiS Ltd from Hewlett Packard Enterprise Co, 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 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 percent of HP Enterprise Co's 60.5 percent stake in MphasiS, it said in a statement.
Under Indian laws, Blackstone also made an open offer to buy a 26 percent 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 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 Pte 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 Ltd said it will sell its IT services business to HCL Technologies Ltd in an all-stock deal valued at 12.37 billion rupees.