FOR SALE – WIND MAKER; $HALF A BIL

Suzlon may sell RE power pie for $500 million
Vivek Sinha, 16 August 2010 (Economic Times of India)

"Private equity fund TPG Capital and a US-based global energy fund are in separate talks with loss-making Suzlon to acquire up to 25% stake in its German wind energy subsidiary, REpower Systems, for $500 million…

"…Suzlon owns 90.7% in REpower and the funds from the stake sale could be used by the Indian wind-turbine maker to pare its total debt…If the company sells around 12% stake of REpower, it could generate cash of around $250 million…"

Both Suzlon and REpower are major players. (click to enlarge)

"REpower, listed on Frankfurt stock exchange, is bearing the brunt of economic uncertainty in Europe, with customers postponing projects…For the quarter ended June 30, the company recorded revenues of e 213.1 million, down 29% over the year-ago period, with net profit of just e 1.8 million.

"The German wind energy firm has a market cap of a little over e 1 billion, or around $1.2 billion, which means Suzlon is negotiating to sell stake at a significant premium. Suzlon had acquired a majority stake in REpower after a bidding war with Areva in a deal that valued the German company at around $1.6 billion…[This will dilute its holdings]…"

click to enlarge

"With environment concerns making them prized assets, alternative energy firms, particularly those related to clean energy, are on the radar of several global investment firms…Suzlon, [India’s] largest and one of the world’s top five wind-turbine makers, has reported losses in four of the past five quarters…[It] is susceptible to forex fluctuations, as a large part of its consolidated revenues comes from outside India, especially Europe that is yet to come out of the economic downturn…

"The move to pare stake in REpower and raise fresh funds for the group comes even as Suzlon has been looking to build synergies with the German arm…This is the second time that Suzlon is trying to reduce its holding in an international subsidiary…Last November, it sold 35% stake in [Belgian gearbox technology firm Hansen Transmissions International] for $361 million that brought down its stake to 26%…"