SE Forge Ltd, a subsidiary of Suzlon Energy Ltd, has raised equity investment of Rs 400 crore from IDFC Private Equity. SE Forge is setting up one of the largest foundry and forging capacities in the world to cater to the 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. SE Forge intends to use the capital to fund these greenfield capacities.
This is the first investment from IDFC PE's third fund of $700 million. It's also IDFC PE's largest investment to date. YES BANK was the sole advisor to SE Forge for this transaction.
The investment will help establish a separate and independent identity of SE Forge for its customers and investors. The company plans to cater to the needs of specialised components for the wind industry and also other sectors outside of wind energy. Pune-based Suzlon Energy is the fifth largest manufacturer of wind turbines in the world.
Tulsi Tanti, Director, SE Forge, and Chairman, Suzlon Energy Ltd, said: “The group had 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."
He said that 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. So the new state-of-the art facilities will not only cater to this growing demand for components globally but will also benefit Suzlon group companies by getting access to high quality products closer to home, Tanti said.
Luis Miranda, President and CEO, IDFC PE, said “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.”
Miranda further said: “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."
Shyam Sundar SG, Managing Director at IDFC PE, will be joining the board of SE Forge.
Interestingly, Bharat Forge, one of the world's largest forgings manufacturers, has also ventured into the manufacture of components for non-automotive sectors like wind energy.