Suzlon Energy hints at selling stake in REpower

Chairman Tulsi Tanti says move will be good for the company’s shareholders
Analysts see this as posturing to force REpower shareholders to sell out

MUMBAI: Home-grown Suzlon Energy is looking at selling a part of the stake it holds in German wind energy peer REpower. Or, is it?

“We are holding a 33.85% stake in REpower,” Suzlon chairman and managing director Tulsi Tanti said while announcing the company’s results on Tuesday. “We can translate this value into huge value creation for our stakeholders.”

Suzlon Energy had acquired the REpower stake at 150 euros per share. The shares are currently quoting at 238 euros in the Frankfurt market, a gain of over 90% since the stake was acquired.

Tanti declined to elaborate on the proposed value unlocking.

REpower has pioneered technology for setting up offshore wind energy turbines in the sea, as Europe exhausted much of its land space for putting up more wind turbines.

For months, there have been reports in the international press that Suzlon Energy is finding it difficult to obtain technology from the German company despite holding a high stake.

“It is speculation with no basis,” Tanti remonstrated to DNA Money.

In an interview after the results, he pointed out that getting a foothold in the offshore technology space was one of the attractions for acquiring the REpower stake in the first place, the other being an entry into Europe.

German law forbids any shareholder to have any special rights over information or technology, he added.

Notably, REpower and Suzlon recently set up a joint venture technology centre in Germany to explore new frontiers in wind energy. Technology developed at the centre would be made available to both the companies.

What’s more, Suzlon also has the voting rights for a further 53.25% stake in REpower (over and above the 33.85% it holds), representing the stakes of nuclear energy major Areva and Portuguese construction major Martifer.

Tanti is confident Areva will sell its stake in REpower. Such a move would make sense for that company since it has picked up a controlling stake in another wind energy company, and may not want to remain a minority stake holder in REpower. “The countdown for Areva’s sale will begin from the last week of May,” said Tanti.
 
But analysts made light of the REpower stake sale buzz as “posturing” by the amiable but shrewd Tanti.
 
“It may be a cloaked message to the market and to REpower shareholders. Nobody can read Mr Smiley’s next step,” said one.

The Rs 13,679 crore Suzlon Energy has sure perfected the art of timing the market.  “We are not just an engineering company. We are a financial engineering company,” Tanti quipped.

“We create value through our business.”

Suzlon recently listed subsidiary Hansen Transmission in the London Stock Exchange and also went in for two tranches of foreign currency convertible bonds that raised an aggregate $800 million. The proceeds can take care of its proposed mega expansion plan.

Like its peers Vestas, Gamesa and others, Suzlon is benefiting from both runaway oil prices and the fear of global warming.

The renewed focus on renewable energy worldwide is working well, too. China has set a target of generating 1,00,000 MW from wind energy - an ambitious target, considering the wind energy generated worldwide today is only 95,000 MW.

“Tax concessions from governments are not the sole drivers in this business,” says Tanti. “As long as oil is priced above $60 a barrel, wind energy will make a lot of economic sense.”

Asked about Suzlon’s plans to get listed in an overseas stock exchange, Tanti dodged the question. “When the time is opportune, we’ll do it,” he said. “All options are open.”

On plans to enter solar energy, he said a pilot project will be set up in Gujarat next fiscal. But, the focus will remain on “Wind, wind and more wind.”

j_satish@dnaindia.net