Hewlett Packard HP Mphasis
Blackstone Group will buy HP Enterprises owned 60.5 percent stake in Mphasis. Picture: An HP Invent logo is pictured in front of Hewlett-Packard international offices in Meyrin near Geneva August 4, 2009.Reuters File

Private equity (PE) fund Blackstone is now the strongest bidder to buy Hewlett Packard Enterprise's (HP) stake in Indian IT services firm Mphasis, after the withdrawal of Tech Mahindra from the race. The deal to acquire the 60.48 percent stake in the listed firm is valued at about $1 billion, reported The Economic Times, citing sources.

The daily said Blackstone and another PE firm Apollo Global Management submitted their bids last week and Blackstone is believed to have raised its offer to outbid Apollo Global, referring to the sources.

"They have made an aggressive offer. Within the next 10-15 days, HP is expected to finalise and get back," ET quoted one an executive as saying, on condition of anonymity.

The Mphasis stock was trading at Rs 481.45 at about 12.55 p.m. on the BSE, up 3.47 percent from its previous close. The promoters' stake is 12,71,06,266 shares, according to the company's regulatory shareholder pattern filing for the December 2015 quarter. 

The company's total income for December 2015 quarter stood at Rs 769.6 crore, down from Rs 793.2 crore in the year-ago period, while net profit declined to Rs 122 crore from Rs 144 crore. 

Blackstone has tied up with Deutsche Bank, Standard Chartered Bank and ING for funds, the ET report added.

Earlier, Mphasis had clarified to the stock exchanges on March 8 that neither the company nor its CEO Ganesh Ayyar are involved in negotiations in stake acquisition, responding to a media report that Blackstone will tie-up with Ayyar (to buy HP's stake in Mphasis).

The PE fund offer also factors in a "control premium" of 10 to 12 percent, and makes for a good business proposition since Mphasis earns about 65 percent of its revenues from the banking, financial services and insurance (BFSI) space, ET said. 

An earlier attempt by HP to exit Mphasis -- founded by former Citibank executive Jerry Rao in 2000 - - fell through on "account of lack of clarity".

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