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NEW DELHI : In a first of its kind transaction for India’s capital markets, private equity major Blackstone will pick up a controlling stake in information technology (IT) services firm R Systems International Ltd for $359 million, and simultaneously delist the firm from the exchanges.

Last year, Sebi said investors can buy a controlling stake in a listed company, and also initiate the process of buying back its shares from the company’s public shareholders. Earlier, investors picking up a controlling stake in a listed company, had to launch an open offer for 26% public shareholding, and only after a certain cooling off period were allowed to launch a delisting offer.

The Sebi’s move is aimed at making the mergers and acquisitions of listed firms more attractive for financial as well as strategic investors, especially foreign investors who may not be keen to run a listed entity in India.

R Systems was founded in 1993 by Satinder Singh Rekhi. It provides digital IT services and specializes in product engineering. It serves over 250 customers in technology, media, telecom, and financial services sectors, globally.

R Systems serves enterprise customers with a varied suite of capabilities in product engineering, artificial intelligence, data analytics, the Internet of Things, robotic process automation and cloud, employing over 4,400 people at 18 delivery centres across Asia Pacific, North America, Europe, and India. R System’s revenue for the 12 months to 30 September was at 1,445 crore ($189 million), up 36% from last year.

Rekhi, along with the other promoters, hold 51.67% in the company. Blackstone will the stake at 245 per share and will simultaneously launch a conditional delisting offer at 246 apiece. Rekhi will continue to guide the company in his role as a non-executive advisor.

The promoter stake acquisition will cost 1,497.68 crore for Blackstone. The delisting move will offer to buy 57.1 million shares, or 48.33%, from the public shareholders for 1,406 crore. “R Systems has been a reliable long-term partner to marquee global customers, guiding them on their digital transformation journey. Its domain knowledge, service quality and global delivery centres make them a partner of choice for all customers. As a leader in outsourced software product development, it is well-positioned to benefit from digitization tailwinds, shorter product launch cycles and increased openness to outsource product development," said Mukesh Mehta, senior managing director, Blackstone.

ABOUT THE AUTHOR

Swaraj Singh Dhanjal

" Based in Mumbai, Swaraj Singh Dhanjal is responsible for Mint’s corporate news coverage. For the past eight years he has been writing on the biggest deals in private equity, venture capital, IPO market and corporate mergers and acquisitions. An engineer and an MBA, he started his journalism career in 2014 with Mint. "
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