Blackstone sells 15.1% stake in Mphasis for ₹6,736 crore

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.