Companies
Polymatech to spend $200-300 million in acquisitions in FY25 IPO process to restart in FY26
Summary
- Semiconductor chip manufacturer Polymatech Electronics will spend close to $300 million in closing two acquisitions within the next few months in the US and France as it expands its presence globally.
Semiconductor chip manufacturer Polymatech Electronics will spend close to $300 million in closing two acquisitions within the next few months in the US and France as it expands its presence globally.
Polymatech Electronics founder Eswara Rao Nandam told Mint that the acquisitions will be funded through a mix of internal accruals and external investments from potential equity investors.
“We will be expanding our US semiconductor fabrication facility planned for next year and there will be an acquisition in Grenoble, France, which will get crystallised within the next three to four weeks. For both these facilities, about $200-300 million will be needed," he said.
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In August, Polymatech's wholly-owned subsidiary, Artificial Electronics Intelligent Materials Pte Ltd in Singapore acquired California-based Nisene Technology Group which is one of the oldest makers of integrated circuits built on silicon and silicon carbide wafer. Polymatech currently makes sapphire-based semiconductors. Nandam elaborated that equity investment is expected to come into Nisene for expanding this facility which will make silicon carbide and sapphire wafers, high-performance Central Processing Units (CPUs), and Graphics Processing Unit (GPUs) for computers and mobiles.
“We’ve been approached by some US funds for investment into Nisene and the minimum ticket size will be about $50-100 million," Nandam added. The company is looking at technology acquisitions in the UK.
Raising wafer tech capabilities
The acquisitions will enable multi-wafer technology abilities with the company giving it an edge over global competitors. Making different kinds of opto-semiconductor chips, also called photonics, on wafers ranging from silicon, silicon carbide and gallium nitride, Polymatech competes with OSRAM GmbH, Broadcom Inc, Samsung, Lite-On Technology, Lumileds Holdings, Toshiba Electronic Devices and Storage Corporation, among other global players.
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The Chennai-based company designs, manufactures, packages, and assembles semiconductor chips and chip modules for various applications, including medical, agriculture, large-area lighting, PCs, laptops, and cell phone backlights. It also exports to the US, UK and the Middle East.
The company continues to plan for a ₹1,500 crore IPO but is likely to take it up after the acquisitions are completed. Promoters, including Nandam, hold around 80% of Polymatech, with 2.6% owned by Nav Capital Emerging Star Fund. Mint reported earlier this year that the company planned to raise twice the amount it had planned earlier and will re-file with the Securities and Exchange Board of India (Sebi) within this year.
Nandam said that since Polymatech had expanded operations from its two manufacturing units in Chennai to Singapore, Bahrain, US and Europe through different companies, it was undertaking a restructuring to bring the companies under one holding entity.
“We have mandated KPMG for structuring, and they will be representing us, to the merchant bankers. Wherever we have plants, all those financials have to be brought and consolidated into Polymatech India. It will take six to seven months," he said, noting that the prospectus will be filed after that.
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Polymatech's revenue nearly doubled to ₹1,200 crore in FY24 from around ₹650 crore in FY23. In FY22, its revenue was at ₹125.87 crore. The company expects to double its revenues every year driven by the anticipated rise in chip demand in the coming years. Besides, it has expanded its chip packaging capacity by 1 billion units in FY24.
Key Takeaways
- The acquisitions will be funded through a mix of internal accruals and external investments from potential equity investors.
- Polymatech makes sapphire-based semiconductors. Equity investment is expected to come into Polymatech's US arm Nisene for expanding its US facility which will make silicon carbide and sapphire wafers, high-performance CPUs, and GPUs for computers and mobiles.
- Polymatech is also looking at technology acquisitions in the UK.
- The company competes with OSRAM GmbH, Broadcom Inc., Samsung, Lite-On Technology, Lumileds Holdings, Toshiba Electronic Devices and Storage Corp.
- The chipmaker continues to plan for a ₹1,500 crore IPO but is likely to take it up after the acquisitions are completed.
