Mphasis Ltd has appointed Nitin Rakesh as chief executive officer, in the IT services provider’s first major management restructuring after global private equity firm Blackstone bought a majority stake in the firm last year in a rare PE-control deal in India.
Rakesh replaces Ganesh Ayyar, who had taken over as CEO in 2009 and whose term expires on 28 January 2017, Mphasis said in a statement.
Rakesh was previously CEO and president of a Nasdaq-listed IT services company Syntel Inc. Rakesh had abruptly left Syntel in November last year after almost three years with the firm.
“Mphasis hopes to gain from Nitin’s vast experience, strong customer orientation and deep insights in the areas of new emerging technologies such as digital and automation,” said Davinder Singh Brar, chairman, Mphasis.
In April last year, Blackstone had entered into a definitive agreement to buy up to 60.48% of Mphasis from Hewlett Packard Enterprise (HPE) for Rs 5,466 crore ($827 million).
The deal, Blackstone’s largest in India, had a clause where the PE giant was to first buy at least a 50.27% stake in Mphasis from HPE for Rs 4,566.2 crore. The proposed buyout had set off a mandatory offer for the purchase of an additional 26% stake from public shareholders, which could have pushed up the overall deal size to as much as Rs 7,071 crore ($1.1 billion, when announced). Depending on the success of the open offer, Blackstone was to buy HPE’s remaining 9.9% stake.
However, in the open offer that concluded in August, Blackstone managed to buy just 2,178 shares against 54.9 million shares it had offered to acquire. It bought HPE’s remaining stake in the process. VCCircle had earlier indicated that since the offer price was not at any significant premium to the market price, it may not find many takers.
The control PE deal is a rarity in India, where most private equity transactions are for growth equity and involve minority stake purchases. The deal came bundled with a master service agreement that required HPE to commit a minimum revenue amount escalating year over year and totaling $990 million over the next five years.
Mphasis, which posted revenues of Rs 6,283.93 crore and a net profit of Rs 669.3 crore for year ended 31 December 2016, counts among its customers the six top global banks, 11 of 15 top mortgage lenders and top three insurance companies.
Shares of the company on Friday ended at Rs 560.55 on the BSE, up 4.86% from the previous close in a flat Mumbai market.
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