Carlyle, Advent and others line to pick up HP’s MphasiS stake?

HP's sale of its stake in MpahsiS is getting hot as multiple bidders are queuing up to pick up its 60.5% holding in the company. According to a latest report in Reuters, it says, "Private equity giants Carlyle Group LP and Blackstone Group LP as well as Indian outsourcers L&T Infotech and Tech Mahindra Ltd, are lining up bids for Hewlett-Packard Co's $1 billion stake in India's MphasiS Ltd. Buyout firms Advent International and Bain Capital LLC are also in talks to bid for HP's 60.5% stake in MphasiS."

MphasiS became HP's asset when it acquired EDS, which acquired MphasiS in 2006. While MphasiS competes with other outsourcing majors like Infosys, Wipro et al it derives bulk of its business from HP's clientele. "MphasiS, which generates roughly half its revenue by providing services to HP's clients, has a market value of $1.8 billion," said the Reuters report.

The reports of HP's MphasiS stake sale has been doing the rounds for the last one year and HP's acquisition of EDS has not been synergized to the best fitment as the PC major struggled to expand the services footprint by series of acquisitions.

The explanation given for its MphasiS stake sale is that HP wanted to focus more on the high value, high margins services business in the emerging tech areas in the realm of cloud and big data, where it can leverage its traditional competencies and provide more of ecosystem based converged IT infrastructure services. Also HP wanted to narrow its debt load through this sell off.

Reports suggest even after the stake sale, HP will continue to give its services mandate to MphasiS but gradually that will come down as MphasiS for its long term sustenance need to look at non-HP accounts.