A clutch of prominent private equity (PE) players, including Advent International, TPG Growth, Kedaara Capital, Goldman Sachs, and ChrysCapital, are in discussions to acquire a significant minority stake in Tessolve, the semiconductor design and engineering company owned by Hero Electronix, multiple sources told ET.
Hero Electronix, backed by Suman Kant Munjal of the Hero Group, is looking to divest a 30% stake in the Bengaluru-based company, valuing Tessolve at around $450 million (Rs 4,000 crore), according to people familiar with the matter.
The process has reached the due diligence stage, with binding bids expected within a month, the sources said. Jefferies is advising the promoters on the stake sale. The PE funds cited above have been shortlisted following the submission of non-binding bids.
Founded in 2004, Tessolve is a full-stack semiconductor solutions provider. Its services span chip design, testing, production support, and embedded software. The company works with 80% of the world’s top 20 semiconductor firms and employs over 3,000 people across 10 countries, including the US, UK, Germany, Canada, Japan, Taiwan, Philippines, Malaysia, and Singapore.
Hero Electronix has been working on a partial exit and is in the process of formalizing a mandate with an investment bank for the transaction, ET first reported in November last year.
Currently, Hero Electronix holds a 58% stake in Tessolve. Novo Tellus Capital Partners, a Singapore-based PE firm, owns 32%, while the remaining shares are held by co-founder Raja Manickam, Qualcomm Ventures, individual investors including Mike Bartley, and employees via stock options.
Hero Electronix had acquired Tessolve from Manickam in 2016.
Tessolve and Goldman Sachs spokespersons declined to comment, while queries sent to Advent, TPG, Kedaara, and ChrysCapital remained unanswered.
When Novo Tellus bought a minority stake in 2021, the company was valued at $100 million. With FY25 EBITDA projected at $20 million, the current fundraising round pegs the valuation at 20x forward EBITDA, sources said.
The company has actively expanded its global footprint through acquisitions. In November 2023, Tessolve acquired Dream Chip Technologies, a German chip design firm, for ₹ 400 crore, bolstering its capabilities in turnkey solutions for high-performance chips. Prior to that, it bought Pico2 Femto Semiconductor (P2fsemi) in 2022 and Test & Verification Solutions (T&VS) in 2020. Tessolve’s international expansion began with the acquisition of Dynamic Test Solutions in the US in 2010.
The deal comes amid rapid growth in India’s semiconductor industry, which is projected to grow at a 20% CAGR, reaching $100 billion by 2032 from $34 billion in 2023, according to industry estimates. Globally, the semiconductor market is forecast to hit $1 trillion by 2030.
Government initiatives such as the India Semiconductor Mission (ISM), launched in 2021 with an outlay of ₹ 76,000 crore, aim to attract foreign investments and build a robust domestic ecosystem. The McKinsey report estimates that India’s semiconductor push could reduce chip import dependency by $10-20 billion in the coming years.
Private equity interest in the sector is also being fueled by emerging trends like chiplets, AI-specific chip innovations, downstream AI applications, and AI-based chip design techniques, according to a Deloitte report.
Source: Economic Times