Dec 4, 2012: The IT services company MphasiS Ltd controlled by Hewlett-Packard has acquired the US-based Digital Risk LLC, a mortgage management firm, for $175 million. The deal struck was an all-cash one which also had additional earn-out component. Digital Risk is based in Florida and offers the mortgage industry compliance, risk as well as transaction management solutions.
MphasiS [stock quote] had started a shift towards getting financial services clients back in 2010. The latest acquisition is just part of the company’s move towards such a disposition. The company started its focus on financial services industry under the leadership of Ganesh Ayyar, CEO of MphasiS.
According to Ganesh Ayyar, the acquisition of Digital Risk will be a central part for the company’s strategy allowing it to focus on chosen segments. The mortgage management firm offers specialized services in compliance and risk management for the mortgage industry. He said that the firm was unique and differentiated due to the analytics platform provided by the company along with the 1500 odd mortgage specialists who works there.
Digital Risk has the license to function in 46 states in the US. In CY2012, the firm is expected to gross revenues amounting to $127 million. Taking into account the last three years, the company revenue has seen a compound annual growth rate of 70 percent.
Peter Kassabov, the chairman and CEO of Digital Risk, said that risk management in mortgage industry is a necessity not only in US but around the globe. He added that the industry as well as the clients will benefit from the unique offering that the acquisition has resulted in.
The current transaction will draw to a close in January 31, 2013 undergoing several regulatory approvals and closing conditions that are customary. After the closure of the transaction, the company would maintain its identity and brand name and function as a standalone business enterprise.
The management and employees of Digital Risk will be retained by it. The founders of the firm will continue leading the company, with Peter Kassabov reporting to the CEO of MphasiS Ganesh Ayyar. MphasiS has expansion plans in the US with a view to create around 500 US jobs in the immediate future. The acquisition will significantly improve the chances of the company to expand its onshore activities in US.
During the acquisition, MphasiS had Avendus Capital and Goodwin Procter LLP as exclusive financial advisor and legal advisor respectively. Portico Capital Securities LLC was financial advisor and Katz, Teller, Brand & Hild served as legal advisor to the acquired firm Digital Risk.