Whalesbook
Shares of Mphasis Ltd. are expected to be a key focus on Tuesday, November 18, as its promoter, Blackstone, is reportedly planning to sell up to 9.5% of the company's total equity. This move is anticipated to be the largest block deal among three such transactions scheduled for the day. The floor price for the Mphasis stake sale has been set at ₹2,570 per share, which is a 4.4% discount compared to the stock's closing price on Monday. At this floor price, the total value of the deal is estimated to be around ₹4,626 crore.
Following this sale, the seller will be subject to a 180-day lock-in period, restricting further sales for six months. In response to a CNBC-TV18 report, Mphasis informed the stock exchanges that it is not directly involved in this transaction, as it pertains to its promoter, BCP Topco IX Pte. Ltd. (part of the Blackstone Group). The company stated it is seeking further clarification from its promoters.
Citigroup is acting as the merchant banker for this transaction. This is not the first time Blackstone has divested a significant portion of its stake in Mphasis; in June of the previous year, the private equity firm sold approximately 15.6% of the company for nearly ₹7,066 crore. Blackstone has been a majority shareholder in Mphasis since 2016 and had acquired a controlling stake in 2021 for $2.8 billion. As of the September quarter, BCP Topco IX Pte. Ltd. held a 40.1% stake in Mphasis.
Shares of Mphasis closed 3.25% lower at ₹2,682 on Monday and have seen a 6% decline year-to-date.
Impact
This large block deal by a significant promoter is likely to create downward pressure on Mphasis's stock price in the short term due to increased supply of shares. However, the market's reaction will also depend on investor appetite for the IT services sector and Mphasis's future growth prospects. The discount offered in the floor price may attract institutional buyers.
Impact Rating: 7/10
Difficult Terms Explained:
Block Deal: A large transaction involving the buying or selling of a significant number of shares of a company, usually executed off-market or on-exchange at a pre-negotiated price.
Promoter: The person or group of people who originally founded or established a company and maintain control over it. In this case, Blackstone Group is the promoter.
Floor Price: The minimum price at which a seller is willing to sell securities in a block deal or an offer for sale.
Lock-in Period: A period during which certain shareholders are restricted from selling their shares.
PE Firm (Private Equity Firm): An investment firm that pools capital from investors to invest in private companies or buy out public companies, taking them private.