Global private equity giant,the Blackstone Group has announced that it has bought a majority stake in CMS Computers Ltd. Blackstone has bought a majority stake in the IT Infrastructure Management and Outsourced Business Services divisions (comprising card solutions, transaction printing solutions and ATM cash management) of CMS Computers Ltd. Though the deal size has not been disclosed, an earlier report said it is around Rs 250 crore. Blackstone will have majority
representation on the board, it has said in a release. The Grover family and some other promoters will hold a substantial minority stake in the new company.
Though the current economic meltdown has taken its toll on IT companies, CMS Computers is much better off as it has a domestic client base. Many of its clients are government companies and PSU's, which allow the company to have predictable cash flows. The CMS brand will also bring old client relationships and goodwill in the market.
The new company has also appointed Microsoft India's ex-CEO Rajiv Kaul as the Executive Vice Chairman and CEO. Kaul was till recently working as a a Partner with Actis Capital.
This will be Blackstone's first deal this year in India and will mark it's second buyout in the IT/ITES space in India. The private equity major completed the management buyout of Intelenet BPO from Barclays and HDFC for Rs 840 crore, last year. Its other buyout in India is garment exporter Gokaldas Exports.
CMS was founded in 1976 by Ramesh Grover, along with Varun Prasad and Ramadorai. CMS Computers has more than 8,000 employees and has presence in four regional centers with 20 branch offices, three research and development centers, three software development centers
and numerous support engineers spread across 130 locations in the country. Grover Family will continue to manage the remaining businesses within the CMS Group.
"We are enthusiastic about this investment as we believe CMS is a market leader and is well positioned to capitalize on the growth opportunity in the IT infrastructure and the outsourcing services market in India. Rajiv brings with him a wealth of experience to lead CMS in the next phase of growth," said Akhil Gupta, Chairman and Senior Managing Director of Blackstone Advisors India Private Limited.