IDFC PE invests INR 400 crores in SE Forge
Pune: Suzlon Energy Limited - the world's fifth largest wind turbine maker with 10.5% of global market share* - announced a major development with IDFC Private Equity entering into an agreement to invest INR 400 crores in Suzlon-subsidiary SE Forge Limited (SE Forge). The move calls for a dilution of 17.1% of stake, in the company specializing in large-scale foundry and forging materials with manufacturing facilities in Coimbatore (Tamil Nadu) and Vadodara (Gujarat) in India, and would reduce Suzlon Energy’s holding in SE Forge to 82.9%.
Speaking on the announced investment, Mr. Tanti said: “With this step we are creating great value for shareholders in yet another subsidiary, after the Hansen success story. The investment reflects the solidity of the company and its business plans. SE Forge is a key part our efforts to achieve a fully integrated value chain in a supply restricted environment, and a catalyst to support industry growth, as we did with Hansen. With IDFC’s participation, SE Forge is set to grow into an industry powerhouse to meet the demands of a growing high-demand marketplace.”
The move is planned to establish a separate and independent identity of SE Forge for its customers, investors, and allow the company to grow with a business plan to cater to the demand for specialized components for the wind industry and also other sectors outside of the wind energy sector with a dedicated professional management.
Luis Miranda, President and CEO, IDFC PE, said “We are extremely pleased to partner with Suzlon to build world class component manufacturing facilities for the wind energy sector in India through SE Forge. Mr. Tanti has time and again proved that he is a visionary and always a few steps ahead of the industry in identifying opportunities. SE Forge is one such initiative.
“This investment fits very well with our theme of partnering with excellent entrepreneurs to de-bottleneck the factors which hamper the infrastructure growth; in this case, it is the wind energy industry. The wind energy sector is expected to maintain its high growth supported by strong tail-winds like increasing cost-competitiveness of wind energy, high crude prices, thrust for green power and support from governments. There is a demand supply gap for large casting and forging products globally and an increasing requirement from the wind and other industries for such products. SE Forge team has put up this facility which can be benchmarked against the best in the sector, anywhere in the world. The management at SE Forge brings together the European quest for quality along with Indian expertise in low-cost manufacturing. It complements our large portfolio in the infrastructure sector. This is our first investment from Fund III and is our largest investment to date”.
Mr. Aditya Sanghi, Managing Director, Investment Banking, Yes Bank, who were advisers to the transaction, said “IDFC PE’s investment in SE Forge revalidates Suzlon’s business model. It also brings together two top pedigree institutions, which have emerged as leaders in their respective industries in a short span of time.”
SE Forge is setting up one of the largest foundry and forging capacities in the world to cater to the growing wind energy sector. The company has established two facilities - a 120,000 MT foundry unit in Coimbatore and a 42,000 rings p.a. ring-rolling forging facility in Vadodara.
* BTM Consult ApS – World Market Update 2007
Foundries Catalogue: SE Forge Limited