 "Dilip Shanghvi plays white knight to Suzlon Energy")
Dilip Shanghvi, India’s second richest person and promoter of Sun Pharmaceuticals, has picked up 23 per cent stake in Suzlon Energy for an equity investment of Rs 1,800 crore, giving the stressed wind turbine maker a fresh dose of fund infusion.
Shanghvi will also collaborate with Suzlon for developing a 450-Mw wind farm in a 50:50 joint venture and will help it in raising non-fund working capital for projects.
Shanghvi, who runs India’s largest pharma company, is being viewed as a white knight to Tulsi Tanti, group chairman of Suzlon, which has been plagued with massive debt and steep losses. Last month, Suzlon sold its larger German subsidiary Senvion to Centrebridge Private Equity for Rs 7,200 crore.
Shanghvi will also collaborate with Suzlon for developing a 450-Mw wind farm in a 50:50 joint venture and will help it in raising non-fund working capital for projects.
Shanghvi, who runs India’s largest pharma company, is being viewed as a white knight to Tulsi Tanti, group chairman of Suzlon, which has been plagued with massive debt and steep losses. Last month, Suzlon sold its larger German subsidiary Senvion to Centrebridge Private Equity for Rs 7,200 crore.
Suzlon will allot 10 million shares on preferential basis to Shanghvi family members and companies owned by him that will collectively hold 23 per cent shares in the company.
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However, there will be no change in control, which remains with the Tanti family due to a pooling arrangement for voting. Tanti and other promoter entities now hold 30.94 per cent shares in the company and their stake will be down to 24 per cent post-acquisition.
Under the deal, Shanghvi and Tanti, who are categorised as persons acting in concert, will jointly make an open offer for over 15.7 million shares amounting to 26 per cent stake in the “emerging voting capital” of the company (this includes addition in the number of shares upon possible conversion of convertible bonds into equity). The open offer price has been set at Rs 18 per share (below its Friday closing price of Rs 19.15) and could necessitate an additional infusion of Rs 2,837 crore for the additional shares.
Sources from Suzlon said there was an internal arrangement between Tanti and Shanghvi on who would make payment for purchasing additional shares in the open offer. “Tulsi Tanti will have absolute control over the company and the Shanghvi family’s stake in the company will remain below Tanti’s holding,” the source added.
The deal will require approval from the Competition Commission of India and the company's shareholders.
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“This financial investment is in sync with the Prime Minister’s long term vision and immense potential of the renewable energy market. While we believe Suzlon has the potential to emerge as a global leader in the renewable energy space from India, it will take substantial and sustained effort on part of the management team to achieve a significant operating performance improvement. We have strong faith in the leadership of Tulsibhai (Tulsi Tanti) to achieve this and will continue as financial investors,” Dilip Shanghvi said in a statement.
“All the strategic initiatives are extremely crucial and will pave the way for our growth. These bold steps will strengthen our capital structure permanently, enabling significant deleveraging and liquidity to ramp up volumes rapidly. With our market leadership, technology strength, successful project execution and best in class service, Suzlon is best placed to capitalise on the opportunities offered by the renewable sector,” Tanti said.
Suzlon says it is poised to enter FY16 with a strong liquidity position to tap the opportunity available in India as well as key growth markets such as the US, China, Brazil, South Africa, Turkey and Mexico.
Suzlon has been facing a difficult period with shrinking market share, high debt and losses. It had consolidated net loss of Rs 1,400 crore in the first two quarters of FY 2015 (Rs 1,847-crore loss during the same period last year) and Rs 3,520 crore in the whole of FY14 compared to Rs 4,724 crore in the previous year.
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