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Blackstone-controlled Mphasis acquires US company Stelligent
Photo Credit: Reuters

Mphasis Ltd, an Indian information technology company that is majority-owned by private equity firm Blackstone, has acquired US-based cloud automation company Stelligent Systems LLC for $25 million (Rs 180 crore) in cash.

Stelligent is a technology services company that specialises in software automation on Amazon Web Services (AWS), the cloud computing arm of e-commerce giant Amazon.com Inc.

The deal will boost Mphasis’ end-to-end capabilities in the public cloud domain especially within AWS services, the Indian company said in a statement.

The transaction will allow the IT company to offer customer-centric digital transformation at scale and will also help with hyper-personalised services for enterprise clients, the statement added.

The acquisition will also extend Mphasis' reach into programmes such as AWS Channel Reseller, AWS Government Partner Program, AWS Managed Service Program, AWS Marketplace Seller and AWS Solution Provider Program. These programmes will give the Indian IT firm more room for revenues.

Interestingly, Mphasis' acquisition comes at a time when cloud service providers such as AWS, Microsoft, IBM and Google are jostling to get more market share in India by providing customised or personalised products. IBM's acquisition of Red Hat also offers the company a similar edge in the country. 

Nitin Rakesh, chief executive officer and executive director at Mphasis, said that as more and more enterprises move to the public cloud, there will not only be a need for customisation and personalisation for customers, but also a need for rapid product development scenarios to reduce time to market.

“Together with Stelligent and its community heroes in the AWS ecosystem, we believe we are uniquely positioned to take advantage of this market opportunity. This allows us to join forces with an equally technically deep company, bringing innovative, in-depth cloud solutions to enterprises in all Mphasis client segments," Rakesh said.

Founded in 2007, the Virginia-based firm has a team of over 50 engineers and holds over 100 certifications. 

“Our engineers will greatly benefit from being part of a larger, complementary tech-centric community as well as serve enterprises in end-to-end AWS DevOps, DevSecOps and additional AWS cloud services," said Bill Santos, CEO, Stelligent. 

Acquisition by Blackstone 

In what was deemed its largest IT bet, private equity firm Blackstone bought a 60% stake in Mphasis from Hewlett Packard Enterprise Ltd for $837 million in April 2016. At that time, Blackstone bought the shares at the rate of Rs 430 a piece.

In June 2017, the PE firm marked its first partial exit from the IT company by participating in a buyback offer. In May this year, Blackstone struck its second partial exit from Mphasis by selling an 8% stake at Rs 960 per share. The PE firm pocketed about Rs 1,500 crore ($221 million) from the deal.

With the latest share sale, Blackstone has taken out over Rs 2,000 crore (more than $320 million) from Mphasis, excluding dividend.

Mphasis’ other buyouts

This is Mphasis’ fifth acquisition and its first since 2012. The deal is also its first under the ownership of PE firm Blackstone. 

So far, it has mostly bought companies based in the US. 

In 2010, Mphasis acquired Fortify Infrastructure Services Inc, an offshore remote IT operations and management (ROM) services firm in the US. Fortify had operations in India as well and had a command centre in Pune, Maharastra.

The deal comprised an upfront payment of $15 million by Mphasis and earn-outs, VCCircle had reported. The revenue of privately-held Fortify was understood to be in the region of $20 million then.

In 2011, Mphasis acquired US-based software vendor Wyde Corp, which was its second investment in the insurance sector. The mid-sized Indian software firm had acquired AIG Software Systems in 2009, its first acquisition in the insurance space.

In 2012, Mphasis Ltd 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 provided risk, compliance and transaction management solutions for the mortgage industry.

According to VCCEdge, the data research platform of News Corp VCCircle, for the financial year 2017-18, Mphasis’ total income rose 8.5% to Rs 3,274.87 crore from Rs 3,018.55 crore in the previous financial year. The company reported a 19.55% jump in profit for 2017-18 at Rs 752.96 crore compared to Rs 629.80 crore for the previous year.

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