Mphasis takes Digital Risk

While HP remains mired in the fall-out from the Autonomy acquisition (start here and work back), Mphasis, its majority-owned but still separately listed Bangalore-based offshore services subsidiary, carries on business as unusual. Unusual, in that it has just announced a substantial acquisition, that of Orlando-headquartered mortgage-related risk, compliance and transaction management software firm, Digital Risk LLC. Mphasis will pay up to $200m cash with $175m up front. Digital Risk is expected to reach revenues of $127m this year with 12% ‘adjusted’ EBITDA. Mphasis' revenues are in the order of $1b p.a.

Setting aside whether or not this is a good deal for Mphasis (certainly mortgage risk management is a hot area in the US), it rather seems to me as if management is flexing its collective muscle with a view to distancing itself from the woes of its parent. HP (and originally EDS) never seemed to put its heart and soul into making Mphasis work as an offshore delivery vehicle and have arguably hamstrung the company in achieving greater potential (and see If only Mphasis was single again!). Perhaps Digital Risk could be the first step towards an amicable separation. We'll have more on Mphasis after it reports its FY results on Wednesday.