Les Échos on January, 25th
Hi readers, here are some articles translated from French to English of French economic press in the energy sector.
Wind sector: Suzlon, the Indian company, discounts its European subsidiary
PATRICK DE JACQUELOT / CORRESPONDENT IN INDIA
Suzlon intended to become a major actor on the European market.
By selling out the company formerly known as REpower for €1 billion to an investment fund, Suzlon hopes to restore its financial situation.
Thursday, Suzlon, the Indian wind turbine manufacturer, announced the selling out of Senvion, its German subsidiary for €1 billion. This decision puts an end to the European adventure of the Indian group, which ranks fifth in the world wind sector.
This wind energy specialist, located in Pune, close to Bombay, made a sensation in 2007 when it took control of REpower, a German turbine manufacturer far more important than Suzlon. The group intended to become a major actor on the European market through this strategic acquisition, which it bought at a high price: €1,5 billion. This audacious choice did not bear fruit. First, the world financial crisis of 2008 entailed a slowdown of the market, which the Indian group did not expect. Second, the acquisition was made mostly through indebtedness, which deeply deteriorated Suzlon finances. In 2012, the group could not refund a convertible bond issue.
Suzlon has not made a good deal
By selling out REpower (renamed Senvion in the meantime) for a third less than its purchasing price, Suzlon has not made a good deal. Maybe it was the only way to restore its financial balance. The amount of €1 billion paid by the purchaser, namely Centerbridge Partners LP, an American investment fund, will be used “to refund the indebtedness, thus decreasing Suzlon financial expenses”, said Tulsi Tanti, the group CEO, on Thursday.
Discounting thus its European investment, Suzlon unveils new priorities: the company intends to focus on the Indian market and on the markets “facing a buoyant growth like the United States, China, Brazil, South Africa, Turkey and Mexico”. With its reduced size, the new Suzlon aims at centering on India particularly, in order to take advantage of the new government’s ambitions in the renewables sector.