TPG beats Advent to emerge frontrunner for Tessolve stake; to invest $140-150 million

TPG Inc has emerged as the frontrunner to buy a significant minority stake in Tessolve, the semiconductor design and engineering company majority owned by Hero Electronix, people familiar with the matter told ET.

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TPG's growth fund has signed an exclusivity pact with Tessolve for starting final deal negotiations, beating a bid from rival PE group Advent International, valuing the Bengaluru-headquartered firm at $475 million-500 million (4,158-4,377 crore). TPG has proposed to invest $140-150 million (1,225-1,313 crore) in Tessolve, as part of the deal, the people said.

TPG is looking to finalise the shareholding agreement this week, and a formal announcement of the deal is expected in the next fortnight, the people said. They did not disclose the size of the stake TPG is aiming to buy.

The potential transaction will mark the second investment for TPG Growth Fund VI that raised $4.8 billion earlier this month. The fund has so far made only one investment-a 35% stake in specialised vaccine packaging maker Schott Poonawalla.

The deal, for an undisclosed amount, was announced in May.

Several other marquee investors including Kedaara Capital, Goldman Sachs and ChrysCapital had also submitted binding bids for Tessolve, ET reported last month. Five binding bids were submitted out of the seven selected after the first round of screening.