Suzlon O&M arm looking to raise $250 million from minority stake sale
Mumbai: Suzlon Global Services Ltd, the operations and maintenance (O&M) subsidiary of Suzlon Energy Ltd, is looking to raise up to $250 million by divesting a large minority stake, two people aware of the plan said.
Suzlon Global is in preliminary discussions with several large global private equity funds for the sale, but is yet to sign an exclusivity agreement on negotiations with anyone, the two people said on condition of anonymity.
“The main purpose of the fund raise is repayment of Suzlon Energy’s debt,” one of the two said.
Suzlon Energy is looking to sell as much as a 40% stake in Suzlon Global, said the second person.
Responding to a query from Mint, a Suzlon Energy spokesperson said, “We do not comment on market speculations.”
Suzlon Global was incorporated in 2004. The company currently provides O&M services for Suzlon Energy’s wind turbine generators (WTGs) in India. According to recent corporate filings, as of 31 March 2017, the company had an installed WTG capacity base under maintenance of 11,297MW.
Suzlon Global was merged with Suzlon Structures Ltd (SSL), a wholly owned subsidiary of Suzlon Energy, effective 1 April 2016, through a high court order. The tubular tower business of SSL was de-merged and transferred to Suzlon Energy.
Suzlon Energy, promoted by Tulsi Tanti, is a fully integrated wind power solutions provider. It provides services such as wind resource mapping, land and infrastructure development, creation of power evacuation facilities, component manufacturing, and wind turbine installation in both domestic and international markets.
Suzlon Energy also undertakes the manufacturing and machining of large forging and casting products through its various subsidiaries.
Suzlon Energy entered a corporate debt restructuring (CDR) exercise in 2013 after defaulting on foreign currency convertible debt (FCCB) repayments in 2012 as overall debt peaked close to Rs12,000 crore. The firm had debt of Rs6,198 crore in FY17.
The company has since then tried to cut debt by monetizing assets. In 2015, Suzlon sold its German subsidiary REpower Systems (now known as Senvion) to US private equity firm Centrebridge for Euro 1 billion (about Rs7,000 crore). The sale was followed by an investment of Rs1,800 crore in Suzlon Energy by Sun Pharmaceutical Industries Ltd chairman Dilip Shanghvi and his family for a 23% stake. According to recent report by credit rating agency Care Ratings, the financial position of Suzlon Energy has improved substantially.
The company’s operating revenue improved by 57% in fiscal year 2017 to Rs11,807 crore from Rs7,519 crores in the previous year, backed by growth in volumes to 1,573MW from 1,131MW.
Last year, independent power producers (IPPs) and government clients accounted for around 80-90% of the total sales of the company.
The company has also ventured into the solar energy market and has won bids for setting up 515MW of solar power capacity across Telangana, Maharashtra, Rajasthan and Jharkhand, signing power purchase agreements for 340MW, recent company filings showed.