Suzlon’s arm Hansen flies on London listing

Belgian firm gains Rs 6,700 cr in valuation since acquisition

MUMBAI: The bets are paying off handsomely for Suzlon Energy. On Friday, it listed Hansen Transmission, a 100% subsidiary, on the London Stock Exchange.

That immediately did two things: it gave the Belgium-based wind turbine gearbox maker a market value of 1.6 billion euros or Rs 9,235 crore, and, secondly, blew away investor concern about Suzlon’s ability to fund its aggressive expansion plans including the acquisition of RePower, the German wind energy firm.

The IPO valuation means Hansen has gained over Rs 6,700 crore in market valuation since Suzlon acquired it in May 2006 for euro 371 million (Rs 2,140 crore - the rest was Hansen debt).

At 9.30 pm India time on Friday, Hansen was the most valuable renewable energy share traded on the LSE when its price jumped 20% to 2.15 pounds, Tulsi Tanti, chairman and managing director of Suzlon, told DNA Money from London.

That gave it a market cap of euros 1.9 billion.

Hansen raised approximately euro 400 million (Rs 2,309 crore) by offering 164 million new shares through the global offer.

Hansen has further granted a 10% over-allotment option over a further 16 million new shares with a value of up to euro 40 million which is exercisable by early January, 2008.

Tulsi Tanti, chairman and managing director, Suzlon Energy, was ecstatic about the global response to the Hansen IPO.

“Suzlon’s interest in Hansen stemmed for all-out potential synergies, the company’s great business potential and the incredible value remaining to be unlocked in the company,” he said.

HSBC analysts Robert Clover and James Magness, in a report on Suzlon on Tuesday said with some clarity now on Suzlon’s funding position with the recent issue of a convertible bond and the prospective spin-off of a stake in Hansen Transmission, the period of uncertainty is over.

Suzlon plans to expand the gearbox maker’s capacities four-fold to 14,200 mw from 3,800 mw by opening new manufacturing facilities in India and China.

Suzlon acquired Hansen to have the ability to make gearboxes, the most critical component in a wind turbine.

Hansen’s importance is obvious as it supplies gearboxes to four of the five largest manufacturers of gear-driven wind turbines — Vestas, Gamesa, Siemens Wind, and Hansen’s parent company, Suzlon Energy.

In 2006, Suzlon and Hansen together supplied more than two-thirds of the gear-driven wind turbines.

In 2006, Hansen estimated that its share of the gear-driven wind turbine market was approximately 27.2%, and that its market share in the segment for gear-driven wind turbines with capacity in excess of 1.5MW was more than 50%. Hansen will use the IPO proceeds to fund expansion of its manufacturing capacity through the construction of integrated facilities in India and China.

Tanti made global investors sit up and take notice of the investment potential of wind energy when he listed Suzlon on October 19, 2005.

Investment bankers said shares of competitors such as Vestas wafted to historic highs drawn by the spotlight generated by the Suzlon listing. Akshay Soni and Binay Singh, analysts with Morgan Stanley, in a recent report said Suzlon is on track to become the third-largest wind company worldwide. Tanti, who started as a small-time producer of textiles, said on Friday Suzlon’s currently fourth behind Vestas, GE and Gamesa.

j_satish@dnaindia.net