U.S. investment fund Blackstone Inc on Thursday said that it would buy a 52 per cent stake from the promoters of a smallcap Indian IT company for $ 359 million or ₹ 2904 crores. It has signed definitive agreements with Satinder Singh Rekhi and other current promoters to purchase a majority stake in R Systems International Limited.
Blackstone said that it would pay ₹ 245 per share of R Systems International Limited, which is a premium of 4.23 per cent on Wednesday’s closing price of ₹ 235.05. Following the announcement, the company’s shares shot up 19.99 per cent on Wednesday and reached an intraday high of ₹ 282.05 apiece.
R Systems is a leading provider of technology, artificial intelligence, analytics and knowledge services. With 25+ years of experience and more than 25 offices worldwide, it has diversified digital offerings to enable or elevate digital transformation. Its business verticals include technology, media, telecom and financial services.
Blackstone is the world’s largest alternative asset manager with $951 billion in assets under management (AUM). This includes investment vehicles focused on private equity, real estate, public debt and equity, infrastructure, life sciences, growth equity, non-investment grade credit and more.
The rationale behind the stake sale
Rekhi said that the company required a partner who could ‘take care of the company’ and that is the reason why they partnered with Blackstone. The company’s management expects to benefit from Blackstone’s scale, expertise, and global track record in IT services.
Mukesh Mehta, Blackstone’s Senior Managing Director said, “R Systems is well-positioned to benefit from digitalization tailwinds, shorter product launch cycles and increased openness to outsource product development. This investment follows Blackstone’s long-standing conviction in IT services and builds on the firm’s robust track record in the sector globally.”
Currently, promoters hold a 51.67 per cent stake in the company, the public holds 47.91 per cent and FIIs hold a 0.42 per cent stake in it. Satinder Singh Rekhi is one of the promoters who will be selling a stake in the company. Post-sale, he will continue to work as a non-executive advisor to Blackstone and the role will develop a little more, going forward.
“I am excited that our partnership with Blackstone will take R Systems on the path to its next level of growth … the company’s management team will be excited to welcome Blackstone and benefit from their scale, expertise, and global track record in IT services,” Rekhi, who is currently the chief executive officer of R Systems added.
Financial and legal advisors
BDA Partners acted as the financial advisor to the sellers of R Systems, while AZB & Partners acted as legal advisors. Further, KPMG, Cyril Amarchand Mangaldas and Simpson Thacher & Bartlett acted as advisors to Blackstone.
Conditional delisting offer
BCP Asia II Topco II Pte. Ltd. (“Acquirer”) along with Blackstone Capital Partners Asia II L.P. (“PAC”) have made an offer for the acquisition of up to 5,71,73,476 equity shares representing 48.33 percent of the voting share capital of R Systems International from all the public shareholders of the company. This offer is made at a price of ₹ 246 per share.
Kotak Mahindra Capital Company, an investment banking firm and the sole manager to the offer shared a copy of the public announcement regarding the delisting offer with the exchanges. The parties are seeking approval from the Securities and Exchange Board of India (SEBI). Click here to know the details.
Price Movement
R Systems’ shares surged by 373 per cent from the beginning of 2020 to the end of 2021, i.e., in two years, giving multibagger returns to its shareholders. Thereafter, its share price retreated by 13.74 per cent on a year-to-date basis.
Written by Simran Bafna
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