MphasiS buys US mortgage management firm for $175M
Hewlett-Packard controlled IT services firm MphasiS Ltd has struck a deal to buy US-based Digital Risk LLC for $175 million in an all-cash deal with an additional earn-out component. Florida-based Digital Risk provides risk, compliance and transaction management solutions for the mortgage industry.
Digital Risk is licensed to operate in 46 states in the US and is expected to register revenues of $127 million in CY2012. The company revenue has grown at a CAGR of 70 per cent in the last three years.
“We began our journey of transformation in 2010 focusing on the Financial Services Industry. This acquisition is central to our strategy of offering specialiSed services in chosen segments. Digital Risk offers highly specialised services in risk and compliance area, specific to mortgage industry. Their analytics platform combined with 1,500 mortgage specialists makes them unique and differentiated,” said Ganesh Ayyar, CEO, MphasiS.
“The need for risk management in the mortgage market is not only a US issue but also a global necessity. This acquisition provides the industry and clients a unique offering,” said Peter Kassabov, chairman and CEO, Digital Risk.
The transaction is currently expected to close by January 31, 2013, subject to regulatory approvals and other customary closing conditions. Upon completion of the transaction, Digital Risk will operate as a standalone business unit retaining its brand identity.
Digital Risk’s founders will continue to lead the company with Peter Kassabov reporting to Ganesh Ayyar, CEO MphasiS. Digital Risk’s management team and employees will remain with the company.
This acquisition significantly enhances MphasiS’ onshore presence in the US. MphasiS has plans to expand its footprint in United States creating up to 500 new US jobs in the near future.
Avendus Capital acted as the exclusive financial advisor and Goodwin Procter LLP acted as legal advisor to MphasiS. Portico Capital Securities, LLC served as financial advisor to Digital Risk and Katz, Teller, Brant & Hild acted as legal advisor to Digital Risk.
(Edited by Prem Udayabhanu)