Fundraising. Aequs raises $27.5 million, aims to expand aerospace business

Diversified contract manufacturing company, Aequs Private, has raised $27.5 million (approximately ₹225 crore) from Amicus Capital and its existing investors. This is the first external round of funding that the company has raised to date, and will focus on deploying the majority of the raised funds to expand its aerospace business, Aravind Melligeri, Chairman & CEO, told businessline.

After devoting themselves to the business for approximately 15 years, we have reached a pivotal point where we must take the next step in our growth trajectory, explained Melligeri.

“To achieve this, and also the need to have an external validation of our business model, led us to seek an external round of funding.” The company also plans to file for an initial public offering (IPO) in the next 3-5 years, as it expects the company and markets to be ready by then.

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Potential for expansion

“As our businesses continue to expand, we plan to utilise our latest round of funding to further develop our existing ventures. Our aerospace business, in particular, has experienced remarkable growth and presents ample potential for further expansion in the current demand environment.”

Moreover, while the market is back, the Western markets are struggling to keep up with the demand, which would bring more opportunities for the company, and essentially prepare itself for those opportunities, he added.

Presently, the aerospace vertical contributes around 70–75 per cent of the company’s total revenue, and the company anticipates that it will remain a significant contributor in the next 1-2 years.

The majority of the funds raised will be allocated to the aerospace business, with the goal of expanding the capacity of its current infrastructure located in Belgaum.

“In addition to this expansion, we also anticipate a need for additional working capital, as the working capital cycles in the aerospace industry have become increasingly elongated due to material challenges.”

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Additionally, according to the CEO, the company has invested a substantial amount of capital in the toys and consumer durables businesses over the last 24 to 36 months and would now focus on utilising the same.

Aequs has an annual turnover of ₹1,000 crore. It plans to expand its aerospace vertical by a significant 40 per cent, while simultaneously striving for a growth rate of 25-30 per cent for its toy business this year. Additionally, the company will concentrate on optimising the utilisation of its consumer durables business, which currently targets primarily the domestic market, to reach a larger global audience.

Mahesh Parasuraman, Co-Founder and Partner at Amicus Capital, said: “ With its marquee customer base, infrastructure and vertically integrated manufacturing capabilities, Aequs is uniquely positioned to play a significant role in India’s emergence as a global manufacturing power-house. We are extremely happy to partner with Aravind and the experienced leadership team at Aequs to become a leading manufacturing platform in the world, with expertise across different industry verticals.”

The company has a total headcount of 4,000 people, of whom 2,100 are on its payroll. Aequs will add another 100 to 200 people to its aerospace verticals this year.

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