Law firms CAM, AZB, and Hogan Lovells assist in a $351 million Qualified Institutional Placement (QIP) for CG Power.
CG Power and Industrial Solutions, an Indian multinational company specialising in power generation, transmission, distribution, and railway transportation, has successfully raised $351 million through a Qualified Institutional Placement (QIP) of equity shares. This fundraising marks a significant step forward in the company's ambitious plans to enter the semiconductor industry.
The QIP transaction received support from several professionals, including Suchisubhra Sarkar, Purva Mishra, Aditya Rajput, Aditya Dsouza, and Kaustubh George from the capital markets team of Hogan Lovells. On the other hand, the capital markets team of Cyril Amarchand Mangaldas, which advised India's CG Power and Industrial Solutions, saw contributions from Devaki Mankad (Lead Partner), Sakshi Sharma, Shabri Bose, Gayathri Ramachandran, Aniruddh Saraswat, and others.
AZB & Partners and Hogan Lovells served as advisors to the bookrunning lead managers for the transaction. Biswajit Chatterjee led the capital markets team of Hogan Lovells for the QIP transaction, while Varun Jetly, Komal Israni, and Sanjana Ravjiani provided additional support.
The funds raised through the QIP are expected to support CG Power and Industrial Solutions' capital expenditure plans and potential acquisitions. The company is already ahead of schedule on its Outsourced Semiconductor Assembly and Test (OSAT) project, with a mini-plant set to start operations in the current quarter and a larger main plant planned to begin production in fiscal year 2027.
This OSAT facility, located in Sanand, Gujarat, is a joint venture with Renesas Electronics America Inc. and Stars Microelectronics. CG Power is investing around $205 million as part of a total $791 million five-year commitment for this venture. The proposed plant will have a capacity of producing 15 million chips per day, with technology and service agreements secured from the partners.
CG Power’s semiconductor business comprises two units: CG Semi (for OSAT operations) and Axiro (focused on radio-frequency and chip design), the latter acquired from Renesas and already generating revenue. The company is using the QIP proceeds to fund this semiconductor initiative and is actively exploring acquisitions to expand its capabilities further.
In addition to the semiconductor venture, CG Power is investing ₹7.1 billion (~$85 million) to build a 45,000 MVA power transformer manufacturing unit, aiming to address growing demand in domestic and export markets, backed by a strong order book valued at ₹146.8 billion, providing revenue visibility for about 1.5 years.
In summary, post-QIP fundraising, CG Power is deploying capital towards building a cutting-edge semiconductor assembly and testing plant through a joint venture while strengthening its power solutions capacity, with ongoing plans to explore further acquisitions to bolster its semiconductor ambitions.
The QIP funds are set to be utilized by CG Power for their capital expenditure plans, including potential acquisitions, as they delve into the semiconductor industry. Additionally, the company is investing in a 45,000 MVA power transformer manufacturing unit to cater to the growing demand, signifying their commitment to both power solutions and semiconductor ventures.
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