India’s CMS About to Be Sold by Blackstone Group


March 10, 2015

Reports on Monday afternoon indicate the Indian company CMS Info Systems is about to be sold. The private equity firm Blackstone Group is in talks with another private equity firm over a possible deal of its 57% stake in the company.


Reports Break Out
Reports first published by Reuters suggest that the private equity firm Blackstone Group is selling its stake to the private equity group Baring Private Equity Asia. Sources have told the news agency the deal could be worth $250 million. Furthermore, the unnamed sources say the two private equity firms have already signed an agreement but formal announcement of the deal is yet to be published.


The latest news comes after it was reported on November last year that Baring Private Equity is interested in CMS. At the time, reports indicated the deal would be worth $400 to $450 million, which would mean Blackstone hasn’t been able to negotiate the kind of deal it might have hoped. The private equity firm paid $50 million for the 55% stake in 2008, as it bought CMS Info Systems from the Grover family. The family currently has 40% stake in the company.


Part of India’s Growing Technology Sector
CMS Info Systems is an information system company, which mainly focuses on providing ATM-related cash management services, such as in-transit services. This sector has seen a surge of growth in recent months, with experts predicting further growth. The banking service sector is seeing plenty of growth opportunities, some due to government’s policy changes. In 2012, the central bank in India allowed individual companies operate ATMs in the country rather than lenders having the exclusive right to do so.


For many private equity experts India is currently offering plenty of reasons for excitement, as the new government is considered more pro-business for a long time. Baring Private Equity India’s chief Rahul Bhasin told Money Control that, “The people are talking about creating an environment where business can prosper and I see a lot of small steps in a lot of things and I must say that it is delightful that I am seeing that because I was almost at a point where I was giving up hope.”


Furthermore, Baring Private Equity Asia’s chief executive, Jean Salata, recently told Live Mint the firm is committed to investing in the region. “We don’t have hard allocations, but judging by our past experience, I would be surprised if we didn’t invest at least a billion dollars of the fund in India,” Mr Salata said.


Best Indian Return for Blackstone
If the deal were to go ahead as reported, it would be Blackstone’s highest return since it ventured into the Indian markets in 2005. The US-based private equity firm currently has a strong presence in India. The firm became the largest owner of commercial property in the country at the end of last year. At the time, analysts speculated the firm is not in a hurry to find exits for its investments in the country.


Furthermore, the firm is reportedly set to buy the famous Willis Tower, formerly known as Sears Tower, in a deal worth $1.5 billion back home in the US. So far, all the parties have declined to comment the latest rumours. But it is likely that a further announcement will be made available in the coming days.


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