HP puts Mphasis up for sale but buyers not seen keen

BANGALORE: IT giant Hewlett-Packard’s plans to sell its 60.49% stake in Indian BPO firm Mphasis will take more time, as potential buyers including private equity players and IT-BPO service companies do not seem very keen, according to a senior official close to the developments.

HP has approached bankers to sell its stake worth `5,368.5 crore. The Mphasis stock, which rose 3.65% on the BSE on Wednesday on renewed stake sale talks, fell 2% on Thursday. Analysts said institutional investors may have cashed in on retail buyers’ enthusiasm.

When contacted, an HP spokesperson said the company “does not comment on rumour or speculation.”

“Mphasis has no comments on your query,” the Mphasis spokesperson said.

HP HAD PLANNED TO SELL OFF ITS IT-BPO ARM MPHASIS, WHICH IS IN DIRECT COMPETITION WITH ITS OWN CAPTIVE OUTSOURCING ARM IN INDIA, OVER A YEAR AGO

HP had laid out a plan to sell off Mphasis, the Bangalorebased business process outsourcing (BPO) arm, which is in direct competition with its own captive BPO arm in India, more than a year ago.

A senior HP executive had said last year it would sell the Bangalore-based BPO in a year or two. Mphasis became part of HP when it acquired Electronic Data Systems Corp, the former parent of Mphasis, in 2008.

“Many fear once they sell their stake, they will no longer give business to Mphasis,” an industry official said.

“For a $112-billion company like HP, Mphasis with $1-billion in revenue is very small. They may not want to spend too much management time on a small business,” said Shashibushan, analyst, Prabhudas Liladhar.

Indian and foreign institutions including Aberdeen Global India Equity, Baring India Private Equity Fund, LIC, Bajaj Allianz and The India Fund together own more than 30% in Mphasis.

“HP’s initial plan was to take its stock holding in Mphasis to 90%, get it de-listed and leverage it more for its own outsourcing requirements,” said a senior executive with a major BPO firm who is privy to the developments.

“However, talks with investors failed over valuations, which led the company to think of selling off its stake,” he added.