GW Caps' India Value Fund may invest Rs 100cr in NeST Group

GW Caps' India Value Fund is likely to invest Rs 100 crore ($22.5 million) for a 15 per cent stake in the Kerala-based NeST Group, a multi-million dollar diversified entity having presence in computer and communication technology areas like networking, fibre optics, RF and microwave, and software.

NeST has hardware and software facilities spread across Thiruvananthapuram, Kochi, Bangalore and Mysore, and in the US. According to market sources, the NeST Group will use the funds to expand its electronics manufacturing segment. But, the company officials did not offer comments on the deal.

They, however, indicated that the group recently began work on a VLSI design centre as part of its plan to set up a manufacturing foundry for memory chips. The design centre is expected to be housed at Kochi and is likely to be operational in the next quarter. It is understood that this unit will provide design for all types of chips and address all aspects of analog and digital communication.

Market sources indicated that this was the kind of investment that GW Caps would be looking for over long-term for its Rs 900-crore India Value Fund. GW has so far invested in sectors like media, healthcare, logistics and supply, precision engineering, and others.

According to market indication, GW is taking this Rs 100-crore exposure to NeST Group as it anticipates a boom in the domestic semiconductor market in the near future.

According to a recent comprehensive report by the India Semiconductor Association and Frost & Sullivan, the semiconductor and embedded design industry in India is estimated to grow at 30 per cent annually to generate revenue worth $43 billion by 2015.

"The total consumption of electronic equipment will rise from the present $28.2 billion to $363 billion by 2015, pushing up the market for semiconductors.

The reports have predicted a growth rate of 29.8 per cent in the electronics equipment consumption during this period," market analysts said while outlining the potential of this industry.

They added that the NeST Group would manufacture memory chips for mobile handsets and consumer electronic products for the domestic and foreign markets. NeST expects India to be one of the biggest consumer markets for memory chips in the near future.