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IDFC PE invests Rs 4,000mn in SE Forge Ltd

This article was posted on Sep 29, 2008 and is filed under Press Releases

SE Forge Limited (SE Forge), a subsidiary of Suzlon Energy Limited, which is setting up one of the largest foundry and forging capacities in the world to cater to the growing wind energy sector, announced today that it has raised equity investment of INR 4,000 Million from IDFC Private Equity (IDFC PE), one of the leading private equity funds in India focussed on infrastructure. YES BANK was the sole advisor to SE Forge for this transaction.

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. The company intends to use the equity investment by IDFC PE to fund these green field capacities. 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 the needs of specialized components for the wind industry and also other sectors outside of wind energy with a dedicated professional management.

Mr. Tulsi Tanti, Director, SE Forge, and Chairman, Suzlon Energy Limited, speaking on the occasion, said “Suzlon has already established its strong presence in the wind turbine segment. The group has taken a conscious strategy a few years back to emerge as a dominant player in the components sector to cater to the sector and Suzlon’s requirements. The acquisition of Hansen was a part of that strategy. The wind energy sector across the world is facing an acute shortage of high quality forging and casting components, with bearing supply becoming the biggest bottleneck the sector faces. That is why we had decided to set up state-of-the art facilities catering to the highest standards of the global wind industry’s requirement and of course our group companies will also benefit by getting access to high quality products closer to home. With IDFC’s participation, SE Forge is set to grow into an industry powerhouse to meet the demands of a growing high-demand marketplace.”

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 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 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.”

He further added, “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”.

Shyam Sundar SG, Managing Director at IDFC PE, will be joining the board of SE Forge.

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.”

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