Wind Turbines, India, and Private Equity

By Douglas A. McIntyre Published Dec 23, 10:26AM EST

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Last summer, Suzlon Energy Limited had a nasty problem with its wind turbine blades. Blades shipped to the US started cracking. Then blades sold in the company’s home country, India, also started cracking. The WSJ noted that one customer said, "The machines are not fit to handle the wind." That stings.

Now, according to Reuters,Mumbai-traded Suzlon wants to raise $500 million, more than half ofwhich the company plans to use to complete the purchase of a majoritystake in a German wind turbine maker REPower. But Suzlon can’t get itsfinancing in order, and REPower’s price target was cut in half lastweek by HSBC (NYSE:HBC). The HSBC analyst noted the stock performancedoes not depend on fundamental data but on the potentially completetakeover by Suzlon. But there are no transaction guarantees due tofinancial limitations at Suzlon, and any deal failure would raiseconcern. Ahem.

Two US private equity firms, The Carlyle Group and TPG Capital, arereportedly looking at investing in Suzlon. Neither commented on thereports. Suzlon is also considering offering debt or selling off someassets.

Suzlon appears to be capable of bringing down itself and REPower. Itdoesn’t make much sense for either Carlyle or TPG Capital to join theparade.

Paul Ausick
December 23, 2008

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.