Suzlon Energy is exploring possibilities of selling part of its promoters’ stake in its unlisted Indian units to private equity firms, to raise money for buying Martifer’s equity stake in REpower.
The Tulsi Tanti-promoted company, last month, postponed a Rs 1,800-crore rights issue that would have part-financed the Martifer stake buyout, estimated at about $338 mn (about Rs 1,690 crore), according to sources close to the development. Suzlon has 66% in REpower and has to acquire the Portugal-based Martifer’s 22.5% stake, as per an earlier agreement.
“The company is looking at all options…we don’t know how badly things (the liquidity crisis) will turn out,” the sources said, adding that they would only look at Indian units for a possible stake sale. When contacted, a company official declined to comment.
The Suzlon promoters, including the Tanti family, own equity stake in Indian wind energy units, related infrastructure companies and units that make components for such firms. Large private equity funds, including Austrian firms — the European nation is one of the world’s leaders in wind energy — recently visited India to explore such transactions and reportedly met the executives of Suzlon, the fifth largest wind turbine maker in the world.
Suzlon had said earlier that the acquisition of Martifer’s stake in REpower will be completed by December 15, increasing Suzlon’s stake to about 90% to facilitate the transfer of advanced technology to its Indian operations. Suzlon and Martifer had successfully bid for a 30% stake in REpower in 2007 for e1.2 bn, in a closely-drawn race that saw the participation of global energy majors such as France’s Areva.
Suzlon has international subsidiaries, including Hansen Transmission. “Although the stake sale in Indian units is among the options, we will go ahead only if we get a good price,” said the sources.
While Suzlon will sell stake in its unlisted units, the recent drop in equity markets — the sensex has fallen 57% since its peak on January 8 — has shaved off a major chunk of the valuations in listed peer companies. In September, Suzlon sold 17% of its stake in SE Forge to IDFC Private Equity for Rs 400 crore.
Suzlon is also thinking of raising money through debt.
. But poor liquidity conditions have restricted its ability to get loans at competitive rates.
Source: Economic Times