Gurgaon-based electronic devices maker Olive Telecommunications is in talks with private equity funds to raise around Rs 150 crore to fire its expansion plans, said sources familiar with the development. 

The firm is in early stages of talks with several private equity players to dilute minority stake. Olive makes devices like mobile handsets, netbooks, wireless routers among others.

One source said, CX Partners, the Ajay Relan-led fund which raised $515 million earlier this year, could be one of the contenders for the deal. But it is still early days and other players have also showed interest.

"Olive Telecom will get back to you soon when they have something to share," said the company, in an emailed response to VCCircle's queries.

Olive, which has a presence in 23 other countries besides India, has sold 20 million devices worldwide since inception in 2006. The firm is eyeing a 5% share in the Indian handset market.

According to recent reports, Olive plans to reach revenues of Rs 5,000 crore by 2012 with a presence in 50 countries. It also reportedly plans to invest Rs 100 crore on brand building and a similar amount on research and development.

Several Indian companies have entered the large mobile handset market by selling locally branded models which are sourced from manufacturers in China and Taiwan. The Indian market has till now been dominated by multinational players like Nokia, Samsung, LG, Motorola, among others. But domestic players have now garnered a 14% share in this market over the last two years, according to telecom journal Voice & Data.

This has presented PE players an opportunity to tap into the growth of this market. Micromax, which leads domestic handset market with a 4.1% share, has raised around Rs 400 crore in funding from TA Associates, Sequoia Capital, Madison India Capital and Sandstone Capital this year. The firm is also expected to go for a public listing, which may be keenly watched to benchmark valuations in this sector.

Mobile device sales in India are forecast to reach 138.6 million in 2010, an increase of 18.5% over 2009 sales of 117 million units, according to Gartner, Inc. The mobile handset market is expected to show steady growth through 2014 when end user sales surpass 206 million units expected to be driven by increased penetration and replacement sales.

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