TPG Invests $150 Million in Tessolve, a Hero Electronix Venture

TPG Growth has invested $150 million in Tessolve, a Hero Electronix-owned semiconductor engineering services company. The investment will be used to strengthen delivery centers, expand test labs, and accelerate strategic acquisitions. TPG Growth will acquire a significant minority stake in Tessolve at a valuation of $500 million, outbidding rival Advent International. Tessolve's revenue has grown from $25 million in FY16 to over $150 million in FY25.

TPG Growth has invested $150 million in Tessolve, a Hero Electronix-owned semiconductor engineering services company, according to recent developments. The investment, which includes acquiring a significant minority stake in Tessolve, comes at a valuation of $500 million, surpassing a bid from rival Advent International. The funds will be used to bolster Tessolve's global delivery centers, expand advanced test labs, and accelerate strategic acquisitions.

The deal marks a significant milestone for Tessolve, which was acquired by Hero Electronix in 2016. The company has seen substantial growth, with its revenue increasing from $25 million in FY16 to over $150 million in FY25. This latest funding round is the largest for a semiconductor engineering services company in India, as per Tessolve's latest statement.

Tessolve, founded in 2004, is a full-stack semiconductor solutions provider, offering services such as chip design, testing, production support, and embedded software. It collaborates with 80% of the world’s top 20 semiconductor companies and employs over 3,000 people across 10 countries. The company's top clients include Texas Instruments, Qualcomm, Nvidia, Intel, and Google.

The investment from TPG Growth aligns with the broader push by the Indian government to build a domestic semiconductor ecosystem. The India Semiconductor Mission (ISM), launched in 2021, aims to attract global investors and reduce the country's reliance on imports, potentially lowering the import bill by $10-20 billion according to McKinsey.

The deal discussions come amid a growing interest in the semiconductor sector, driven by emerging trends such as chiplets, artificial intelligence-specific chip innovations, and AI-based chip design techniques. Private equity interest in the sector is also being driven by these trends, according to Deloitte.

References:
[1] https://economictimes.indiatimes.com/industry/cons-products/electronics/tpg-in-advanced-talks-to-invest-140150-million-in-hero-electronix-backed-tessolve/articleshow/123510954.cms
[2] https://www.business-standard.com/companies/news/tessolve-raises-150-million-tpg-semiconductor-expansion-india-125090100424_1.html