Blackstone has pledged its entire 30.55% stake in Mphasis Ltd and raised an estimated $700 million, an executive said, to refinance a loan taken to fund the private equity firm’s buyout of the Indian-listed IT services company.
The direct pledge of Blackstone’s entire holding in Mphasis is arguably the first instance of an IT services company owner using shares as collateral for loans.
Singapore-based promoter entity BCP Topco IX Pvt Ltd, a Blackstone-owned entity, borrowed money from a group of nine banks – Citibank, Barclays, HSBC, Deutsche Bank, JPMorgan, Morgan Stanley, BNP Paribas, MUFG, and Nomura.
Each of these banks is represented by Catalyst Trusteeship Ltd, which informed the stock exchanges on Tuesday that it will hold and manage the Mphasis shares on their behalf.
“The current pledge created by Blackstone over the shares of Mphasis relates to a refinancing of pre-existing acquisition financing at the promoter entity. As part of this routine refinancing transaction, the earlier indirect pledge over shares of Mphasis is being replaced with a direct pledge over shares of Mphasis held by the promoter entity,” an Mphasis spokesperson said.
Under a 2021 agreement with three dozen global banks, Blackstone raised $1.1 billion when it owned about 55% of Mphasis. Then, BCP Asia (SG) Mirror Holding Pte Ltd, the holding company of BCP Topco, pledged its assets with the banks for the transaction, making it an indirect pledge, and Mphasis shares were not directly put as collateral. Hence, Mphasis did not have to make that disclosure of promoter pledge.
This time, BCP Topco put up its entire 30.55% stake in Mphasis as collateral, requiring the disclosure to be made.
Blackstone acquired a 60.4% stake in Mphasis from Hewlett Packard Enterprise in September 2016 and reduced its stake over the past decade by selling shares on three occasions: in 2018, 2024 and 2025.
Collateral value
Mphasis did not detail the amount that BCP Topco raised. However, borrowers can raise at least 50% of the asset's collateral value.
On Tuesday, Mphasis’s market capitalization was ₹42,380 crore, implying that Blackstone’s 30.55% stake was about ₹13,000 crore and that it would have borrowed at least ₹6,500 crore ($700 million), according to an executive.
Blackstone’s use of shares as collateral to borrow money, a common practice among PE firms, comes as shares of IT services companies have crashed, with foreign investors edgy about the future of the $315 billion outsourcing industry in the age of AI.
Shares of the country’s 15 largest IT services companies have fallen 20% to 40% since the start of the year. Mphasis shares have dropped 20.4% since the start of the year.
Mphasis, the country’s eighth-largest IT services company, reported 7% growth in revenue to $1.8 billion last year, its fastest in three years, despite questions raised about business from its top accounts including FedEx.
Its margins were unchanged from the preceding year at 15.3%. Last month, it gave a third, five-year term to incumbent chief executive officer Nitin Rakesh.
