The Hindu Business Line : MphasiS plans overseas listing — To buy out MsourcE stake from Barings, employees

The proposed overseas float is likely to be listed at the New York Stock Exchange. However, the company is yet to decide on the timeline and the corpus of the float.

Bangalore , Feb. 27

MPHASIS-BFL will acquire the minority shareholding of about 25.26 per cent in its business process outsourcing arm, MsourcE Corporation, to make it a wholly-owned subsidiary.

This buy-out will be through a mix of stock and cash.

MphasiS, which currently owns 75 per cent of MsourcE, will buy out 20 per cent from Barings Pvt Equity Fund and five per cent from individual investors, said Mr Ravi Ramu, Chief Financial Officer.

MphasiS also plans to convert about 5.6 per cent stake held by employees of MsourcE as stock options by paying cash and issuing its own shares.

The approximate valuation of MsourcE Corporation under the proposal works out to $145 million.

The board of directors of MphasiS, which met in New Delhi on Thursday, approved the company's plans to increase its stake in MsourcE and also gave the green signal to go for an overseas listing through the issue of ADRs.

The proposed overseas float is likely to be listed at the New York Stock Exchange.

However, the company is yet to decide on the timeline and the corpus of the float, Mr Ramu said.

With the MsourcE stake buy-out, the equity of MphasiS will be diluted which would have an impact on the earnings per share of the company. "We are yet to work out the details of the equity dilution," Mr Ramu said.

Though he did not detail the impact of the equity dilution on the EPS, analysts believe that the dilution impact could be in the range of Rs 2 per share.

Mr Ramu also refused to comment on the talks of a possible buy-out.

Speculation has been rife that MphasiS was in talks with the Bangalore-based software services firm, Kshema Technologies, for acquisition.

More Stories on : Mergers & Acquisitions | Outsourcing | Overseas Borrowings

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