Senvion GmbH has agreed to sell 100 per cent of its Indian operations (Senvion India) to Global Renewable Energy Development Holding Company Limited (GREDHCL). Subject to regulatory approvals, the sale is proposed to close in the first quarter of 2021. The transaction envisages the transfer of complete ownership of Senvion India along with all assets such as the factory, installed base of O&M and current ongoing projects, intellectual property rights relevant for the Indian market and its employees. The acquiring entity, GREDHCL is a fund based out of the Dubai International Financial Centre. Ernst & Young acted as financial advisor to GREDHCL and Rothschild & Co acted as financial advisors to Senvion GmbH in this transaction.
Amit Kansal, CEO and MD of Senvion India, said, “Senvion India has been a key participant in the Indian renewable space since its inception in 2016. Senvion aligned itself to the government goals of localisation and Make-in-India at a very early stage and now makes more than 85 per cent of its turbine parts in India thus generating local employment and innovations. Senvion firmly believes that wind power generation is critical in the energy mix to achieve the 450 GW of renewable power by 2030. Senvion India is committed to relentlessly work to develop innovative technologies to attain the goals of delivering competitive wind power.”
Consolidation has become common in the renewable energy sector with many industry players merging their operations to gain greater market share or acquiring cash-strapped firms looking to exit the market.
Background of Senvion
Senvion, or Repower Systems as it was initially called, was established in 2001 post the merger of three small wind power companies based out of Germany: engineering consultancy Pro + Pro, and wind turbine suppliers BWU and Jacobs Energie. The initial few years for the company were successful as it launched many technologically advanced products. The reason for the initial success was its strong product development. A few years before Senvion was formed, Pro + Pro had developed the 1.5 MW high speed geared MD70 wind turbine series with the help of Jacobs Energie. In 2000, one year before the formation of Senvion, Jacobs Energie purchased the wind turbine manufacturing activities of HusumerSchiffswerft, which had filed for insolvency. The turbine incorporated the technology of pitch control, variable speed and doubly fed induction generator.
At the time, this technology was futuristic and was offered by few players, thus helping Senvion carve a niche in the German wind industry. Initially, the wind industry was doubtful about the success of the MD70 prototype. However, the larger variant of the prototype with a 77 metre rotor became a commercial success. This proved to be the beginning of Senvion’s growth story. In 2002, it launched the 2 MW MM series, which became one of Senvion’s most successful wind turbine series. The series has been upgraded thrice. In 2003, Senvion launched MM82 and in 2005, MM92. After a longer gap, MM100 was launched in 2011. To counter the stiff competition from Vestas and Siemens Gamesa, it launched a larger 2.3 MW wind turbine with a 130 metre rotor. Senvion also developed multiple variants of 3 MW-plus onshore wind turbines. Since the beginning Senvion has had ambitious plans and it wanted to tap the offshore wind market as well. Initially, it worked on a 5 MW offshore wind turbine variant, and in 2017, it announced a bold plan to develop a 10 MW variant with a 126 metre rotor. The project was unfortunately stalled due to the company’s declining financial status. It would have been one of the largest offshore wind turbines of that time.
Downward spiral for Senvion India
In 2007, Indian wind turbine manufacturer Suzlon bought a controlling stake in Senvion for over Euro 1.8 billion. The acquisition did not bear any fruit for both companies. Suzlon had anticipated that the purchase would help in increasing its global presence and easing its financial difficulties. Unfortunately, that did not happen. On the contrary, the financial difficulties of Suzlon had an adverse impact on the performance of Senvion. The situation became worse when the few top executives of Senvion left the company. Thus, Suzlon had no option but to sell Senvion in 2015 to another hopeful investor, the US-based private equity firm Centerbridge Partners. However, the turnaround for Senvion did not happen again. The company became insolvent and had to sell its global assets to Siemens Gamesa in 2019.