Mumbai, Aug. 25: Barings Private Equity Partners is reportedly in talks with US-based Electronic Data System (EDS) to sell its rump 11.31 per cent stake in MphasiS, the Rs 940-crore IT and BPO service provider.
Earlier this year, Barings had sold a 24.32 per cent stake to EDS. The buzz in the market is that Barings wants to complete the second leg of the deal by the end of the year.
However, Rahul Bhasin, Barings Equity Partner’s managing partner in India, denied that they were contemplating such a selloff.
If Barings goes through with the sale, EDS may have to come out with another open offer to mop up minority stakes in MphasiS.
As of June 30, Baring India Investment holds 11.31 per cent in Mphasis, Jerry Rao holds 3.17 per cent while others such as Fid Funds, Investek Mauritius, Merrill Lynch, HSBC and Aberdeen Assets together hold 15.88 per cent.
The market expects the second open offer to be priced close to Rs 220, much higher than the last offer of Rs 204.
In July, EDS had hiked its stake in Bangalore-based MphasiS BFL to 61.8 per cent from the present 51.4 per cent as a result of merger of EDS India, a wholly owned subsidiary of EDS with MphasiS BFL. The swap ratio of the merger was fixed at 5: 4, that is five shares of Mphasis for every four shares of EDS India.
In June, Plano, Texas-based EDS had successfully snapped up a majority stake in MphasiS through an open offer. EDS had announced that more than 83 million shares of MphasiS were tendered in the open offer of Rs 204.5 per share (approximately $4.50) which closed on June 5. The open offer was announced on April 3.
The cash payout for the transaction that gave EDS a majority stake in the company was approximately $380 million.
At the time of the announcement of the open offer, EDS had said the offer price of Rs 204.5 represented an almost 30 per cent premium to the 26-week average price of MphasiS.
EDS had been in negotiations with MphasiS to buy out Baring Private Equity’s stake in the company since May-June 2005.
Baring had earlier tried to sell off MphasiS’s stake to buyers like Temasek, Carlyle, Hinduja TMT and CapGemini, but negotiations had fallen through.
At present valuation, the EDS-MphasiS deal has fallen drastically short of what the speculation has been. The deal size was expected to touch $800 million, one of the largest ever seen.
