Next Orbit Ventures launches ESDM-focused $750M PE fund

Growth-stage investor Next Orbit Ventures has launched its second fund with a target corpus of $750 million (Rs 4,875 crore), or more than five times the size of its first fund, to invest mainly in companies that make semiconductor chips and solar and LED components.

The firm has received soft commitment of $160 million for Next Orbit Ventures Fund II, Ajay Jalan, founder and managing partner at the firm, told VCCircle.

The fund, which will focus on the electronic system design and manufacturing (EDSM) sector, expects a first close of $300 million by March 2016, he said.

The fund comes at a time when demand for electronics products in increasing in India. The Indian government estimates domestic demand for electronics to reach $400 billion by 2020. Local output is estimated to cover only a fourth of the demand, and imports will make up the remaining.

“Since the target sector is big, the corpus has increased,” said Jalan, who is a chartered accountant by qualification and has previously worked with companies including Semindia Fab Group and i2 Technologies.

Jalan said the firm is in talks with a consortium that has received a letter of intent by the government to set up semiconductor plants in the country. The new fund may invest $150 million in the consortium and other co-investors are likely to put in $350 million.

While Jalan didn’t name the consortium, the government last year offered a letter of intent to two groups led by Jaiprakash Associates Ltd and HSMC Technologies India Pvt Ltd.

The second fund will typically invest between $10 million and $50 million, except in semiconductor unit where the ticket size will be higher. 

The development was first reported by The Hindu Business Line.

Next Orbit Ventures Fund I, which was launched in 2013, had a corpus of $140 million. It has a portfolio of 19 companies. According to VCCEdge, it invested in BDR Buildcon Ltd, Supernova Advertising Ltd and Madhuban Construction Ltd in 2014.

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