Indian wind turbine manufacturer Suzlon Energy is planning to raise 10,000-crore by diluting 25 percent of its German subsidiary Senvion SE (erstwhile RE Power) through an IPO in London Stock Exchange (LSE), to pay off its debts.
Suzlon Energy expects Rs. 40,000-crore valuation for Senvion. The share sale is likely to be the biggest offering in rupee terms by an Indian firm in the global market in recent years, said a report in Times of India.
The company is in talks with financial institutions and banks for private placement of equity. As per an insider in the company, Suzlon “has got assurance from one of the non-lenders to buy its shares in the private placement to benchmark the price,” the report said.
Suzlon has a debt of Rs 13,000 crore. The company has recorded loss for the last three years. It has also been unable to pay its bondholders due to the slowdown in the global markets, TOI said.
With overall improvement in economy and upturn in wind energy markets now, Suzlon is planning to cash in on this opportunity to sell Senvion shares to reduce its debt and improve profits.
On the other hand, Senvion is a debt free company with strong growth prospects and profitability, said Suzlon Group CEO Kirti Bagadia to TOI.
“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,” Bagadia said.
Industry reports also suggest that Suzlon Global Services Limited, the new operations, maintenance and services (OMS) business subsidiary of Suzlon in India, may be transferred to Senvion to add value as it yields regular annuity type income.
Suzlon claims it has a global installed capacity of 24,000MW, a fourth of which is in India. The company is ranked as the seventh largest wind turbine manufacturer in the world, mainly due to its growth in India and the U.S. markets, according to Navigant Research in its annual BTM World Market Update report.
Earlier last year Suzlon Energy sold $650 million (around INR 3,575 crore) worth of bonds backed by lenders, including State Bank of India, to refinance the debt.