MONDAY: As per latest information released by Palo Alto, Calif. based Hewlett Packard Enterprise Co. (NASDAQ: HPE), it might dispose-off its stake in Mphasis Ltd. (currently an Indian outsourcing firm) – worth US$ 825 million – to leveraged finance markets’ participant, Blackstone Group LP. The decision comes following a recent decline in revenue; hence in order to bolster up its position once more, if it decides to opt a deal.
As per details, Blackstone Group will be acquiring at least 84% of HPE’s stake in Mphasis Ltd., for an estimate of US$ 6.49/share (i.e. INDR. 430 /share) – a certain projection towards private-equity firm’s resilience in software exporter’s flourishing prospects inspite of technological shortcomings.
Not to mention, Blackstone has been stepping up its investments in India’s information technology and outsourcing companies over the past year. Upon reach, comments made by both the firms – for readers’ concern:
Blackstone will purchase the remaining 16% of our stake via a mandatory tender offer to shareholders – Hewlett Packard Enterprise
Depending on the demand for that offer, the deal could be worth as much as US$ 1.1 billion – Blackstone
“HPE’s decision to sell its position in Bangalore-based Mphasis aligns with our current capital allocation priorities.” – stated HPE’s spokeswoman.
Moreover, exclusive data received from Market Watch cites HPE’s last month’s first Q net income to be US$ 267 million, i.e. 15 cents/share; bearish from US$ 547 million – a bearish implication towards 30 cents/share, a year ago. On a similar note, currency issues further lowered revenue rate from US$ 13.05 billion to US$ 12.72 billion.
INSIGHT: As per claims made by Blackstone, Mphasis’s largest client is Hewlett Packard Enterprise itself. Blackstone lauded Mphasis’s “deep vertical expertise” in the banking, financial services and insurance sectors, with profit after tax of about US$ 104 million last year on revenue scale at US$ 904 million.
“Blackstone probably sees an opportunity to expand Mphasis’s list of clients in order to spur growth, meanwhile Mphasis will gain the advantage of having access to Blackstone’s portfolio companies.” – Indian unit of consultancy Information Services Group Inc.’s partner, Dinesh Goel
“From HPE’s perspective it makes sense to divest its stake in Mphasis. The extra cash gives them some leverage now without affecting their core operations too much.” – Gartner’s research director, Arup Roy
Amid deal policies, one lets the U.S. firm proceeding work with Mphasis for till eleven years.
