TPG, Apax, Primerica eye minority stake in Tessolve Semiconductor at $300 mn valuation
MUMBAI
:
Bengaluru-based Tessolve Semiconductor Pvt. Ltd is in talks with global private equity (PE) firms Apax Digital, TPG, and Primerica, among others, to sell a minority stake for growth capital, according to three people with knowledge of the development.
The PE firms are eyeing 30-40% stake in the semiconductor services company at a valuation of around $300 million, the people cited above said on the condition of anonymity.
'Currently, the due diligence is on," the first person said. 'Binding bids will take some time."
The second person said that global investment bank Jefferies has been appointed to help the company raise capital. 'The capital will help the company grow its business inorganically and expand into newer categories and also grow its geographical presence," this person said. 'It is looking for a PE partner to help it with growth capital."
Also read | Hero Electronix's Tessolve acquires German chip design firm for ₹400 crore
Tessolve Semiconductor is 70% owned by Hero Electronix, which is part of Delhi-based Hero Group and is promoted by Suman Kant Munjal, managing director of auto-component manufacturer Rockman Industries.
According to the second person cited above, the company is clocking around $20-25 million in annual operating income (Ebitda or earnings before interest, tax, depreciation and amortisation). 'It is seeking around 17-18 times its Ebitda as valuation," the person added. The company is projecting annualised growth rate of around 20-25% over the next few years. In FY24, the Ebitda was ₹130.81 crore on a consolidated basis, according to VCCEdge.
Earlier, Tessolve in 2021 reportedly raised $40 million from Singapore-based private equity firm Novo Tellus Capital Partners at a $100 million valuation, and used the funds for acquisitions and expansions.
Spokespersons for Jefferies, TPG and Apax Digital declined to comment. Emails to Hero Electronix, Novo Tellus, Primerica, and Tessolve Semiconductor remained unanswered till press time.
Serving the semiconductor ecosystem
Founded in 2004 by a group of tech entrepreneurs and acquired by Hero Electronix in 2016, Tessolve provides top global semiconductor product companies with semiconductor IC (integrated circuit) design, test and product engineering, PCB (printed circuit board) design, failure analysis and systems design.
In an interview with Mint last year, Chinamilli, co-founder and chief executive of the Bengaluru-based company said Tessolve is mulling an initial public offering (IPO) in some time. 'An IPO is definitely on the table, not right now but in three, four years from now," he had said then.
Read this | Hero Group's chip design unit Tessolve mulls IPO in 3-4 years, to expand India operations
Tessolve closed FY24 with net sales of ₹1,020.70 crore in FY24, according to VCCEdge. Mint reported last year that it expects to grow 20% in FY25 on the back of demand coming from India where several companies are setting up testing and packaging units, besides the first fabrication unit being set up by Tata Electronics.
Tessolve, which recently opened testing labs in the US, Singapore and India, also plans centres in tier-II cities across states. Its solutions help semiconductor manufacturing and packaging companies accelerate their products to market, as it removes the need for them to make their own investments into design, engineering and testing chips.
Such chips may be used in a variety of sectors including automotive and power management, besides artificial intelligence (AI) applications, electric vehicles and data centres.
And read | KKR, TPG eye Relisys Medical Devices in early-stage buyout talks
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