Blackstone sells Mphasis tranche in early Monday trade

Blackstone sells Mphasis tranche in early Monday trade
Blackstone sells Mphasis tranche in early Monday trade/Reuters
Blackstone sells Mphasis tranche in early Monday trade
Blackstone sells Mphasis tranche in early Monday trade/Reuters

Blackstone sells Mphasis tranche in early Monday trade

Blackstone sells Mphasis tranche in early Monday trade

Blackstone sells Mphasis tranche in early Monday trade

MINT

Blackstone sold 28.5 million shares in Mphasis Ltd on Monday, amounting to a 15.1% stake through a bulk deal on the National Stock Exchange.

The global investment firm sold shares amounting to ₹6,735.6 crore in the information technology services company at ₹2,363.37 apiece on the National Stock Exchange (NSE). BCP Topco IX Pte, an affiliate of  Blackstone, was the likely seller.

Several institutional investors participated in the transaction. Kotak Mutual Fund acquired a 2.51% stake for ₹1,121.3 crore, Morgan Stanley Asia Singapore Pte bought a 1.18% stake for ₹526 crore, and Societe Generale purchased a 0.56% stake for ₹250.8 crore, all at ₹2,363 apiece on the NSE.

Following the transaction, Mphasis shares dropped as much as 5% to ₹2,353.55 apiece intraday, before recovering to close 3% lower. The Nifty IT index closed at 34,526.25, down 1.83%.  

Mphasis has underperformed this year, delivering a negative return of 12.4% to investors, compared to the Nifty IT index’s negative return of 3.3%.

This is Blackstone’s second move at selling Mphasis shares, this time through the open markets. BCP Topco IX Pte’s stake in the Indian company now stands reduced to 40.37% after the sale from 55.45%.

Blackstone Capital Partners first acquired a 60.48% stake in Mphasis from Hewlett Packard Enterprises in 2016 for ₹5,466 crore (approximately $827 million). After unsuccessful attempts to sell its Mphasis shares privately, Blackstone rolled over its stake into a new fund in April 2021. At the time, Blackstone along with Abu Dhabi Investment Authority (ADIA), GIC, UC Investments, and others, acquired a majority stake in Mphasis for around ₹21,000 crore (around $2.8 billion).

Blackstone declined to comment on Monday. 

Bengaluru-based Mphasis provides information technology services, including business process outsourcing services.

“We believe for the (Mphasis) stock to re-rate from here on it needs its largest vertical, BFSI, to display acceleration and depends on US rate-cuts due to exposure to mortgage portfolio,” brokerage JP Morgan had said in a report dated 28 April 2024. 

The brokerage has a target price of ₹2,500 on the stock and a neutral rating. The target price is based on 24x one-year forward P/E, which is slightly higher than the three-year average. 

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