Dilip Shanghvi to buy 23% Suzlon stake for Rs1800 crore
Management control remains with Tanti Family of Suzlon by virtue of pooling arrangement for voting
Mumbai: Suzlon Energy Ltd, world’s fifth largest wind turbine manufacturer, on Saturday said it has signed definitive agreements with Dilip Shanghvi Family and Associates (DSA) for equity investments of Rs1,800 crore in the company.
Suzlon Energy is promoted by Tulsi Tanti.
Post allotment, DSA shareholding will be 23% shares (based on current shareholding), while the Tanti Family will hold 24% shares.
Management control remains with Tanti Family by virtue of pooling arrangement for voting, the wind turbine maker said in a statement.
“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,” Shanghvi said.
Sanghvi said he has strong faith in the leadership of chairman Tanti to achieve this and will continue as financial investors.
Sudhir Valia, part of DSA, said despite having strong fundamentals, during last couple of years Suzlon’s performance was impacted by macro headwinds and liquidity constraints.
“We believe that our financial investment through equity infusion and facilitating working capital will enable the company to tap large opportunities in the renewable energy sector. We will be making an Open Offer as per regulatory requirement,” Valia said.
DSA and Suzlon will form equal joint venture with for wind farm development business, the statement said. The joint venture will develop 450 MW wind farms within a stipulated period of time.
DSA will also assist in providing incremental project specific non-fund based working capital facility to Suzlon for execution of the wind farm project.
DSA will also provide credit enhancement to the lenders of Suzlon for additional project specific working capital facilities.
Tulsi Tanti, chairman — Suzlon Group, said all the strategic initiatives are extremely crucial and will pave the way for growth.
“ These bold steps will strengthen our capital structure permanently, enabling significant deleveraging and liquidity to ramp up volumes rapidly. We are convinced that the support from Dilipbhai Shanghvi and Family will help in creating a long term sustainable value for our stakeholders,” Tanti said.
Tanti said Suzlon is poised to enter FY16 with a strong liquidity position to tap the opportunity available in India as well as key growth markets like USA, China, Brazil, South Africa, Turkey and Mexico.
Amit Agarwal chief financial officer of Suzlon Energy said these initiatives will result in sizeable debt reduction, savings on interest expense and will provide the necessary liquidity to boost operations.
Suzlon’s Tanti said the company and DSA will invest Rs400 crore each for wind farm business.
Tanti did not comment on the proposed open offer and its implications.
“Its too early to comment on open offer. Current regulations mandate for an open offer. However, the management control will be with us,” Tanti said.
Last month, Suzlon Group had signed a binding agreement with Centerbridge Partners LP, USA to sell 100% stake in Senvion SE, a wholly owned subsidiary of the Suzlon Group. The deal is valued at EUR 1 billion (approximately Rs7200 crore) equity value in an all cash transaction.
Meanwhile, Dilip Shanghvi and others on Saturday has made an open offer to shareholders of Suzlon Energy immediately after announcing that it wound invest Rs1800 crore to buy 23% stake in the company.
The Dilip Shanghvi will buy up to 157.64 crore share of the Suzlon Energy at Rs18 a share for Rs2837.59 crore, the BSE notice said.
On Friday, Suzlon Energy ended at Rs19.15 on BSE, unchanged from Thursday’s close while India’s benchmark Sensex Index rose 1.01% to close at 29094.93 points.
IndusInd Bank Ltd is managing the open offer for Shanghvi and family.
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