IDFC Private Equity, an infrastructure-focused PE firm with $1.3 billion under management, is swapping its stake in the components arm of wind turbine maker Suzlon Energy Ltd for an interest in the listed parent company. Suzlon Energy informed the exchanges today that IDFC Private Equity Fund III will be issued 31,992,528 shares of Rs. 2 each by way of preferential allotment. These shares are worth Rs 183.5 crore as per Friday's closing price of Rs 57.35.
Suzlon Energy has also permission of shareholders to raise Rs 5,000 crore by issue of securities. It is also looking to raise the borrowing limit from Rs 7,000 crore to Rs 10,000 crore.
SE Forge Ltd. which makes large forging and casting products catering primarily to the wind power industry, will now become a wholly owned subsidiary of Suzlon Energy. IDFC PE picked up 17.1% stake in SE Forge for Rs 400 crore a little more than two years ago in September 2008.
The share price of Suzlon reacted positively to the news, and were trading at Rs 58.25 in the early trade, up by 1.57%.
As per the current outstanding share capital, IDFC PE will get around a 1.8% stake in Suzlon Energy. IDFC PE has also earlier swapped shares of unlisted subsidaries for stake in listed parent companies. Last year, it swapped shares in Delhi International Airport Ltd for a stake in GMR Infrastructure.
Suzlon underwent a refinancing of debt which came after its acquisition of companies like REpower and Hansen. It also sold a 35% of Hansen for around $370 million in November '09 to reduce its net debt $2.20 billion by the end of May earlier this year.