According to reports, Suzlon Energy, world’s seventh largest wind turbine manufacturer, is planning to sell shares in its German subsidiary Senvion SE (erstwhile RE Power) to raise Rs 10,000-crore by listing it on the London Stock Exchange (LSE).
The company will have to dilute 25% stake in Senvion to meet the UK listing norms and expects a Rs 40,000-crore valuation for its crown jewel. The share sale is likely to be the biggest offering in rupee terms by an Indian firm in the global market in recent years.
“Suzlon is planning to sell shares of its global firm Senvion to list it on LSE to raise a billion pounds. The company is in talks with financial institutions and banks for private placement of equity and has got assurance from one of the non-lenders to buy its shares in the private placement to benchmark the price,” said a source in the know of the development, without elaborating on the pricing of the share sale.
The company is tipped to rope in Barclays to manage the share sale. The company plans to conduct road shows in Hong Kong, Singapore, London and New York in coming months.
“We plan a capital restructuring to reduce our debts. We have all our options open. European capital markets, shut for quite some time, have opened up now and have shown huge appetite for clean renewable stories. Senvion is a marquee asset in wind space, with strong growth and profitability, besides being debt free. We, as a sensible company, are exploring a few corporate finance solutions to tap the opportunity,” Suzlon Group CEO Kirti Bagadia told TOI, adding that “you know the profitability and growth of Senvion and the market multiples of the listed peer group. You can work out the number”.
Suzlon, with a debt of Rs 13,000 crore, has been making losses for the last three years. It has also been unable to pay its bondholders due to the slowdown in the global markets. Suzlon shares closed up 3% at Rs 10 in a firm Mumbai market on Friday, valuing the firm at Rs 2,460 crore.
However, with a recovery in the global economy and upturn in the wind energy markets, Suzlon wants to cash in on this opportunity to sell Senvion shares, which has surplus cash, to reduce its debt and turn profitable.
However, a Mumbai-based analyst said, “Listing is a good idea and Suzlon, in spite of being a parent of Senvion, can’t bring its cash in India to reduce debt.”
The company recently carved out its operations, maintenance and services (OMS) business in India into a separate wholly owned subsidiary Suzlon Global Services Limited, which may be transferred to Senvion to add value as it yields regular annuity type income.
Suzlon, with an order book of $7 billion and global installed capacity of 24,000MW, a fourth of which is in India, has dropped two positions to become world’s seventh largest wind turbine manufacturer due to contraction of traditionally strong, home and the US markets, according to Navigant Research in its annual BTM World Market Update report.