IDFC PE buys 17.1% in Suzlon's forging arm

IDFC PE buys 17.1% in Suzlon's forging arm IDFC Private Equity has picked up a 17.1% stake in Tulsi Tanti-promoted SE Forge — a 100% subsidiary of Suzlon Energy (SEL) — for Rs 400 crore. The transaction values SE Forge at a little over Rs 2,300 crore. IDFC PE has made this investment out of its recently closed Fund III, which has a corpus of about $700 mn. SE Forge, manufacturer of forging and casting products, primarily catering to the wind power industry, intends to use funds for its expansion plans. The company is setting up one of the largest foundry and forging capacities in the world to cater to the fast growing wind energy segment. SE Forge is setting up two facilities — a 120,000 mt foundry unit in Coimbatore and a ring-rolling forging facility at Vadodara, with a capacity to produce 42,000 rings annually. IDFC PE will be represented by Shyam Sundar on the company board. The company is expected to make an announcement to this effect shortly. Yes Bank was the sole advisor to SE Forge for this transaction. “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,” Luis Miranda, president and CEO, IDFC PE, said. “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,” he added. SE Forge’s foundry unit at Coimbatore will manufacture ductile iron castings of weight ranging from 1 to 25 tonnes per piece. However, it can also produce castings of larger size. For the wind industry, the foundry unit will produce large castings like hub, rotor shaft, main-frame and bearing housing used in the manufacturing of wind turbine generators (WTGs). The foundry unit also plans to cater to the needs of other industries like diesel engines, machine tools and engineering equipments and is initially planning to produce engine blocks and gearbox castings. Its forging unit near Vadodara will manufacture forged rings for WTGs namely flanges for tabular towers, gear rim, ring gear for gear boxes and bearing rings which will be supplied to WTG or WTG component manufacturers. The forgings unit is established with a capacity of about 42,000 rings pa. Meanwhile, flagship company Suzlon Energy, which recently acquired Germany’s REpower, has announced that it will raise Rs 1,800 crore from a rights issue. The world’s fifth-largest wind turbine maker recently bought Portuguese energy major Martifer’s 22.48% stake in REpower for about Rs 1,748 crore. IDFC PE manages funds of $1.3 bn. Some of its investments include Delhi International Airport, L&T Infrastructure Developers, Gujarat Pipavav Port and Chalet Hotels.