Private equity firm Blackstone will buy out HP Enterprise's stake in Mphasis for up to Rs 7,071 crore, marking the largest IT deal for the US-based firm in India
Mphasis is "excited" about the transaction where Blackstone will be acquiring major stake in the company, and it promises accelerated growth, stability and predictability, CEO Ganesh Ayyar, bottom, left, said.
"I feel like a kid in the toy shop, excited about the potential that is ahead of us," Ayyar told reporters in Bengaluru. "....the potential is huge, I'm excited about it... all of us wanted to see Mphasis as a company in the top quadrant of growth and value, and this gives us that platform to be in the top quadrant of growth and value as a company...."
"I have been talking to various team members and I can say that the excitement is spreading within Mphasis...; we believe this can set up a platform for Mphasis for accelerated growth with continuity, stability and predictability."
Private equity firm Blackstone today said it will buy out HP Enterprise's stake in Mphasis for up to Rs 7,071 crore ($1.1 billion), marking the largest IT deal for the US-based firm in India.
Pointing out that HP and direct business are top two businesses for Mphasis, Ayyar said, "Direct business is probably half of our total revenue and is growing at approximately 14 per cent per annum, while HP business which is about a quarter of our revenue is declining between 19 to 21 per cent per annum."
Speaking on the MSA (Master Services Agreement), he said "you contextualise quarter of our business (HP) which is declining between 19-21 per cent...all of you have been asking what is the predictability of this business , this particular transaction gives us that base, the foundation of minimum revenue guarantee and the opportunity to grow it further."
"This can do wonders to overall Mphasis because the declining business if it stabilises or if it stars growing it can have huge impact on overall company growth," he added.
HPE and Blackstone have agreed on the terms of a Master Services Agreement (MSA) which HPE proposes to sign with Mphasis, post approval by Mphasis' Board of Directors and shareholders.
The duration of the MSA is five years with three automatic renewals of two years each. Under the MSA, HPE has proposed to commit a minimum revenue amount escalating year over year and totalling USD 990 million over the next five years.
Also, Mphasis will be included in HPE's Preferred Provider Program opening up significant additional revenue opportunities.
Speaking about the opportunities for Mphasis's direct business, Ayyar said "...if we accelerate the growth of direct code beyond 14 per cent that it is now, and we stabilize and bring some growth back in to HP business, this will do tremendous wonders to Mphasis...."
Noting that first response from the employees has been positive to this transaction, Ayyar said he saw no reason why "we will lose top talent or management as a result."
"What this transaction promises is accelerated growth, stability and predictability. When business becomes unpredictable, that's when top talent and managements starts getting jittery."
"In this case we can look forward to our future with lot of confidence. I don't see that as a problem," he added.
