Suzlon Energy, India's largest manufacturer of wind turbine generators, yesterday raised Rs5.2 billion ($110 million) via a secondary share placement that was launched and priced before the opening of the Indian market. The shares were sold by the company's promoters, but the funds raised will be injected into Suzlon in order to meet payment obligations for the acquisition of REpower, a German wind turbine company.
A total of 60 million shares were on offer, at a price between Rs87 and Rs94, representing a discount of between zero and 7.5% to Friday's closing price. One source said that an initial price range of Rs91.2 to Rs94 was discussed, but investor feedback led to a broader range at the launch of the deal.
The deal was priced at the bottom -- Rs87 per share -- for the widest discount. After the completion of the transaction, the shares opened 2.8% lower at Rs91.35 and by the end of yesterday's trading session they had fallen 4.8% to Rs89.45.
Indian stocks rallied last week in response to the news that the Congress Party-led coalition had secured a second term following a marathon election that was run over several weeks. Suzlon moved with the rest of the market -- gaining 21.8% on the first day of trading after the results. By the end of the week, the gain had increased just a little, to 23%.
Some 20 investors bought into yesterday's offering during a three-hour bookbuild, leaving the order book in excess of two times covered. A substantial number of pre-existing shareholders participated in the deal. The book was described by a source as mostly long-only funds with some hedge funds.
Suzlon finalised the payment schedule for Martifer Holdings' 22.4% stake in REpower in December last year. Under the agreed terms, Suzlon would pay the Portuguese company €65 million ($91 million) in December 2008 and €30 million in April this year, with the final amount of €175 million ($245 million) to be paid in May. Once the deal is complete, Suzlon will own 91% of REpower.
Citi was the sole bookrunner of yesterday's placement. The US investment bank also handled a smaller Suzlon placement of around $47 million two weeks ago.