HgCapital to acquire Dutch cordless unit

The European mid-market private equity firm has reached agreement to acquire the digital cordless business unit of the Netherlands’ National Semiconductor Corporation.

National Semiconductor Corporation (NSC) of the Netherlands has agreed to sell its digital cordless business unit to London-based mid-market firm HgCapital by the end of July 2005.

The size of HgCapital’s investment was not disclosed but is understood to have been between $75 million and $100 million. It is known that the firm invested $10.5 million in the deal from its publicly listed HgCapital Trust plc.

The newly independent company, which will be known as SiTEL Semiconductor, designs and sells chips to original equipment manufacturers (OEMs) in the digital short-range wireless communications market across a range of end-user applications.

Alex Shivananda, director, HgCapital 

Alex Shivananda, who led the deal for HgCapital, told PEO: “We have viewed the fab-less sector as attractive for quite a while due to its high growth and return on capital. In addition, we have been seeing the rapid expansion of wireless networks and more and more use [of wireless technology] in the home.”

He said HgCapital approached NSC towards the end of last year and presented it with an “unprompted offer”, having identified the digital unit as non-core to NSC’s main analogue activities.

Detailing the characteristics that attracted HgCapital to the business, Shivananda said: “It has a good management team, some of the best engineers in the sector, an internationally diverse customer base and strong OEM customers.”

He added that he expected the business to achieve sales growth of around 20 percent next year and added that it would seek to build on its core real-time short-range communications activities such as baseband and radio transceivers for cordless telephony and VOIP (voice over internet protocol) as well as moving into new areas such as cordless game pads and voice modules.

The deal is the third investment by HgCapital in the Netherlands in the last three years. Shivananda said the firm was currently looking to “staff up further” its Amsterdam office, which was launched around a year ago.