Hero Group’s chip design unit Tessolve is considering an IPO in 3-4 years to expand operations in India

“A public offering is definitely being considered, not now, but in three or four years,” he said in response to a question whether the company was preparing for a public listing. He did not specify the number of shares the company might consider putting into public ownership or the amount of funds it might raise from the market.

Tessolve is keen to raise funds for acquisitions and future growth and sees interest from global private equity funds looking to invest in the company, he said.

“We are in talks at the moment, but we have not made any decision yet. We are a fast-growing, cash-flow positive company, but to accelerate growth and make more acquisitions, we may consider raising more funds,” he added, noting that the next fundraising will be significantly larger than the previous one.

The company is considering further buyouts

The company raised $40 million from Singapore-based private equity firm Novo Tellus Capital Partners at a 2021 valuation of $100 million, and then used the funds for acquisitions and expansions. It is considering further buyouts, including one near completion in Europe, to expand its capabilities and geographic reach, a top executive said, without disclosing details.

The Hero Group company, which designs, tests and manufactures semiconductor chips in 10 countries for 80% of the world’s top 20 semiconductor companies, is expanding its operations globally. It recently opened labs in the US, Singapore and India and is planning centers in tier-2 cities in various states.

“Until now, our market for test product engineering was outside India, but now thanks to Indian initiatives, a new market is opening up for us. We are expanding our footprint in India and globally and also setting up laboratories,” Chinamilli said, adding that it may bring to India some of the advanced manufacturing, products and expertise from global laboratories working on cutting-edge technology.

“Our key initiative in India is to set up centers in secondary cities. We have a successful training program with over 5,000 engineers trained in partnership with universities to develop talent,” he said. The company has already expanded to three times its size at its Bengaluru center, but is in talks with several state governments that have approached it to set up centers.

After closing the financial year 24 z ₹with revenues of ₹1,000 crore, it expects to grow 20% in FY25 due to demand coming from India, where several companies are setting up testing and packaging units, apart from the first manufacturing unit set up by Tata Electronics.

“All these entities talk to us because we have been building infrastructure for the last 20 years, so they don’t have to look for this kind of expertise from other service providers outside India,” Chinamilli added.

Tessolve solutions help semiconductor and packaging companies accelerate their products to market by eliminating the need for them to make their own investments in designing, engineering and testing chips that can be used in a variety of sectors, including automotive and energy management, in addition to used in artificial intelligence (AI) applications, electric vehicles and data centers.

Chinamilli said that in addition to sectors such as artificial intelligence and automation, geopolitical factors also contributed to the company’s growth as companies looked for alternatives to China in engineering and manufacturing. “We were very early in India, investing here for the last 20 years, so we are reaping the benefits of that.”