Blackstone Group has agreed to acquire a majority stake in Mumbai-listed R Systems International Limited, as the world’s biggest buyout firm expands its technology portfolio in India.
The New York-listed private equity firm said Wednesday it has signed definitive agreements with R Systems founder Satinder Singh Rekhi and other current promoters to buy their 51.67% stake in the company for Rs 245 per share. This translates to Rs 1,497.7 crore ($177 million).
Shares of R Systems jumped 17% on the BSE on Thursday to trade around Rs 275 apiece.
The PE firm, which also owns 55.7% of Indian IT company Mphasis, said Rekhi will continue to guide R Systems as a non-executive advisor.
Blackstone has also launched a conditional delisting offer at a price of Rs 246 per share for R Systems. Non-promoter shareholders currently own 48.33% of R Systems. Blackstone will spend up to Rs 1,406.5 crore to buy this stake.
Blackstone will need to acquire 38.33% from public shareholders to take its stake to 90% and take the company private. It also has the option to buy up to 26% in the open offer for up to Rs 753.6 crore.
R Systems, founded in 1993 by Rekhi, provides IT services, specializing in product engineering, and serves over 250 customers in technology, media, telecom, and financial services sectors globally. It employs over 4,400 people across 18 delivery centres in North America, Europe, Asia Pacific, and India. Its revenue for the last twelve months, as of September 30, 2022, was Rs 1,445 crore ($189 million), registering a 36% year on year growth.
“This investment follows Blackstone’s long-standing conviction in IT services and builds on the firm’s robust track record in the sector globally,” said Mukesh Mehta, Senior Managing Director at Blackstone.
BDA Partners acted as the financial advisor to the sellers of R Systems. AZB & Partners acted as legal advisor to the sellers. KPMG, Cyril Amarchand Mangaldas and Simpson Thacher & Bartlett acted as advisors to Blackstone.
The transaction is expected to be completed in the coming months, subject to customary closing conditions and regulatory approvals.