TPG Set to Acquire Minority Stake in Tessolve, Valuing Semiconductor Firm at $500 Million

TPG Inc, a global alternative asset management firm, has emerged as the frontrunner to acquire a significant minority stake in Tessolve, a leading semiconductor design and engineering company. The deal, which values the Bengaluru-based firm at approximately $475-500 million, could see TPG investing between $140-150 million.

Deal Structure and Valuation

TPG's growth fund has reportedly signed an exclusivity agreement for the investment, outbidding rival Advent International. The proposed deal structure involves both primary and secondary share purchases, indicating a mix of fresh capital infusion and partial exits for existing investors.

Current Ownership and Investor Exit

Hero Electronix, the current majority stakeholder, owns 58% of Tessolve, while Novo Tellus Capital Partners holds a 32% stake. As part of the deal, Novo Tellus and some seed investors are expected to partially exit their positions. Hero Electronix, however, will retain its majority ownership.

Tessolve's Market Position

Founded in 2004, Tessolve has established itself as a key player in the semiconductor industry. The company boasts an impressive client roster, working with 80% of the world's top 20 semiconductor companies. Its global footprint spans 10 countries, with a workforce exceeding 3,000 employees.

Financial Performance

Tessolve's strong market position is reflected in its financial projections. The company is expected to generate revenue of $200.00 million, with a healthy EBITDA margin of 20.00%.

TPG's Investment Strategy

This investment marks the second deal for TPG Growth Fund VI, which recently raised $4.80 billion. The fund's interest in Tessolve aligns with the growing importance of the semiconductor industry in the global technology landscape.

Looking Ahead

While the exclusivity agreement has been signed, the formal announcement of the deal is anticipated within the next two weeks. This investment is poised to provide Tessolve with additional resources to further strengthen its position in the competitive semiconductor design and engineering market.

As the semiconductor industry continues to evolve rapidly, strategic investments like this underscore the sector's critical role in driving technological advancements across various industries.