Indian electronics manufacturers are gaining significant traction from private equity and venture capital firms, drawn by the sector’s growth potential and government support. Firms like Multiples Alternate Asset Management and TA Associates are actively seeking investment opportunities in companies like Zetwerk and Amber Enterprises.
Homegrown electronics manufacturers are drawing significant attention from private equity and venture capital firms, chasing the next big investment opportunity.
Multiples Alternate Asset Management, TA Associates, Motilal Oswal, Apollo Global, and Reliance Capital are among PE/VC firms scouting for companies that could become multibaggers, industry executives said.
Companies on the lookout for funding include Zetwerk, Amber Enterprises, and Syrma SGS, who have announced multiple JVs and acquisitions ahead of the September 30 deadline to apply for the electronics component manufacturing scheme (ECMS). PE firms are gaining confidence from electronics manufacturing services companies such as Dixon Technologies achieving strong multiples when they went public, said Rahul Sharma, cofounder at Bhagwati Products Ltd, a contract manufacturer owned by the Micromax Group.
Dixon Technologies, among the leading local electronics manufacturers, reported doubling of net profit in the June quarter to ₹280 crore.
It was backed by a 95% surge in revenue at Rs 12,838 crore.
The company currently has a market capitalisation of about Rs 96,491 crore.
“Private equity interest was not really in manufacturing until the last few years, but now they are the new darlings of private equity,” said Sharma. “This is a sector that has a mandate from the government and is growing very fast.”
Sharma however highlighted that Bhagwati will be funding its upcoming joint ventures and acquisitions from internal accruals. These are for manufacturing electronics components such as display assembly and mechanical enclosures. PE firms typically get involved in sectors a little prior to their emergence in the public domain, said Josh Fougler, president at Zetwerk, an electronics contract manufacturer.
Foulger said he will be meeting investors in the next few days in Mumbai and Delhi, adding that there is a lot of interest in the sector.
“Government policies such as ECMS are actively supporting and funding this sector, creating a moat and a protective barrier for investments, which is attractive to PE firms,” said Foulger.
Zetwerk is a frontrunner among the top EMS companies in securing major PE investments.
The company has raised $800-900 million in multiple rounds from investors including Khosla Ventures, Greenoaks, D1 Capital Partners, and Avenir.
Foulger said Zetwerk has infused Rs 1,000 crore to fund its expansion into electronics component manufacturing. The company plans to make printed circuit boards (PCBs), mechanical enclosures, special sensors, connectors, and capital equipment.
According to him, PE firms bring more than just capital.
“They are sophisticated entities with their own research arms, investor networks, and can help bring customers directly to businesses. They also offer strategic insights and engage expert advisers to evaluate investments,” he said.
Others such as Syrma and Amber are taking the qualified institutional placement (QIP) route to raise fresh capital for backing their inorganic expansions into the component business.
Amber, for instance, is in the market to raise Rs 4,200 crore for capex, and another Rs 700-800 crore for acquisitions.
“We filed an enabling resolution for the AGM for Rs 2,500 crore of QIP. A lot of private equity funds who are chasing to invest in the electronic division could be the second portion,” said Jasbir Singh, executive chairman and CEO at Amber Enterprises.
Singh said all the large investors are interested in providing growth capital to electronics manufacturers.
“Electronics is becoming that sector where a lot of funds are expected to get poured in by PEs who are looking at multiples in returns once they go public in the next few years,” Singh said.
Amber itself had in the past raised funds from PE firms across three rounds, Singh said.
Syrma, which is also investing in a PCB plant under the ECMS, said it has taken a board resolution for a Rs 1,000 crore QIP to finance its acquisitions and greenfield expansion projects.
