After deferring a Rs 1,800 crore rights issue last week, Suzlon Energy Ltd, the wind energy major, has started talks with international private equity firms to sell a 5 to 8 per cent shareholding for a valuation between Rs 800 crore and Rs 1,000 crore, banking sources said.
The wind energy major plans to use the funds for its expansion plans and to complete the acquisition of Germany-based REpower Systems AG.
The expected valuation for stake sale represents a premium of between 80 and 100 per cent to the current market capitalisation of Rs 6,920 crore.
Suzlon’s shares have fallen 70 per cent in the last one month alone, and its value has eroded nearly 88 per cent from its all-time high market capitalisation of Rs 55,510 crore in January 21 this year, the day the stock was split.
Banking sources familiar with the development said the company was in discussions with private equity firms including Goldman Sachs and General Atlantic to come up with a definite plan to raise the funds. They said another private equity major, Blackstone, was also in the fray.
A Suzlon spokesperson declined to comment, and an e-mail sent to the company has yet to elicit any response. Goldman Sachs and General Atlantic could not be immediately reached for comments.
However, a key Suzlon official, who preferred not to be quoted, said: “We are in discussions with multiple private equity firms but I am not in a position to disclose the details and direction of the discussions.”
The promoters of Suzlon led by Chairman and Managing Director Tulsi R Tanti and family holding 65.83 per cent stake in the company, which is the world’s fifth-largest wind power turbine manufacturer.
Suzlon is implementing a capacity expansion from the current 2,700 Mw to 5,700 Mw, scheduled to be completed in the current financial year. This 3,000-Mw capacity expansion entails a capital expenditure of Rs 2,961 crore and production was to begin in July next year.
Suzlon is also setting up forging facilities of 70,000 metric tonne capacity and foundry facilities of 120,000 MT, scheduled to start production in the third quarter of FY09.
