Lava plans to invest in R&D, to raise $90 mn from US fund
By MYBRANDBOOK
Indian phone-maker Lava International claimed that it will raise $90 million (Rs630 crore) from GEM Global Yield fund to invest in R&D with the aim of emerging as a handset market leader in the sub-$150 price segment.
GEM group will make the investment over the next 36 months for through a 'Share Subscription Facility' which will allow the company to sell American depositary receipts to the US fund house in exchange for drawing down available funds, Lava said in a statement.
“The company will use the funds to strengthen its business by funding its research, development and business expansion activities, with the objective of becoming a market leader in the sub-$150 cellular phone segment,” Lava said.
Lava’s smartphone assembly plants have been long under-utilised, with the handset along with other Indian players seeing their share taken over in a market swamped by Chinese players such as Xiaomi, Oppo, and Vivo, besides Korea’s Samsung.
But Lava's share has picked up off late. Lava has a 5.3% overall share of the handset installed base. In feature phones, it has an 8.5% share while in smartphones; its share is 3.1%, including Xolo, said research agency TechArc.
Despite the tough competitive scenario, Lava has been making significant investments to ramp up its research and development, and has been snapping up some contract manufacturing deals.
At the peak of Sino-India trade war in August last year, Lava along with Micromax had bagged a Rs 2,500 order for manufacturing sub-$200 devices from US telco major AT&T along with rivals T-Mobile and Sprint.
Lava also bagged a multi-crore deal from US conglomerate General Electric to manufacture hand-held devices meant specifically for medical use in September last year.
Global Emerging Markets is a $3.4 billion alternative investment group that manages a diverse set of investment vehicles focused on emerging markets across the world and have completed 370+ transactions in 70 countries.
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