TPG-led group clinches Rs 7,000 cr Siemens Gamesa deal

US buyout group TPG has struck a deal with Siemens Gamesa, the wind power subsidiary of Siemens Energy, to buy a majority stake in its onshore wind turbine generator manufacturing business in India and Sri Lanka, for an undisclosed sum.

The investment routed via TPG’s Rise Climate fund will be the first investment from its Global South initiative launched at the COP28 climate change summit last year in partnership with Altérra, a joint communique said on Wednesday.


The deal will help the troubled German turbine maker revitalise its operation that has been grappling with high costs, debt and product-related challenges. Altérra is the world’s largest private investment vehicle for climate finance.

ET was first to report on this transaction on March 25.

TPG will be leading a consortium of investors. They include Prashant Jain, former CEO of JSW Energy, as well as Mavco Investments, a company owned by some of the promoters of the Murugappa Group such as Vellayan Subbiah, executive chairman of Tube Investments of India (TII) and Cholamandalam Investment & Finance Co.

Jain and Mavco will own minority stakes in a new company set up to transfer Siemens Gamesa’s existing manufacturing infrastructure of around 10 GW a year at two facilities in Tamil Nadu and Andhra Pradesh along with about 1,000 employees. Siemens Gamesa will also own a minority stake in this yet-to-be-named vehicle, to which it will exclusively license its intellectual property and technology to develop the next generation of products for existing and new customers, the companies said in the official announcement.

According to people in the know, the new investor trio will infuse around Rs 1,000 crore of primary capital to grow the business as well as pay Rs 4,500 crore to Siemens for the secondary purchase of shares from the German technology and industrial conglomerate. The business already has Rs 2,000 crore of debt.

Subbiah will be chairman of the board at the new company with Jain serving as executive vice chairman. Vinod Philip, Siemens Energy director responsible for Siemens Gamesa, will represent his company.

"We are industrial private equity investors that are looking at industrial opportunities to solve the climate problem, which in this case is the ability to serve end users across the socioeconomic spectrum with clean and competitively priced, green, round-the-clock, energy," said Ankur Thadani, head of TPG Climate, Asia. “Climate is an opportunity which is not just a generational challenge but a generational opportunity, and requires a dedicated pool of capital, a dedicated team, and global connectivity, because it's evolving synchronously around the world.”

The plan is to Make in India for the local market and be among the lowest-cost producers in a hyper-competitive market that is already seeing aggressive inroads by western and even Chinese players such as Goldwing, Envision, Sany and homegrown Suzlon. Exports too will be a priority.

“This company could also become a key component of our global supply chain because as a company we wanted to diversify our supply chain and have strong entities in places like India that can also support our global business,” said Philip in an interaction with ET.

Products that are uniquely tweaked and “adapted” to suit the Indian conditions of low wind speeds and high ambience are also a key deliverable, said the team.

“This is a great opportunity for India to become part of a global supply chain--in the case of wind energy, the entire supply chain (up to 90%) is being manufactured in India,” Jain said.

Some of the legacy service contracts like the one with Singaporean utility company Sembcorp that is under litigation will be kept out of this new venture. Other contracts–both under implementation and new ones–will be transferred.

The new team is confident that its competitive pricing, product quality and superior technology that is used across Siemens Gamesa’s footprint of 57 countries, execution, speed of delivery and service responsiveness will help it stand out. “If you play these, one can have a very clear differentiator,” said Philip.

It is only a “change in ownership and not focus or business commitments,” said Subbiah. “Our first 100 days’ plans include meeting both existing customers and potential customers in the pipeline to ensure continuity. Also, we would be mapping production and operational issues and focus on transition management.”

As the third-largest consumer of energy in the world, India is committed to achieve 500GW of non-fossil fuel based energy capacity by 2030. With the country’s transition to enable more sustainable energy, the wind energy sector will also continue to see high market growth, with an anticipated addition of approximately 57 GW of capacity by 2032.

“Wind industry is at an inflection point in India given the government’s renewable energy mandate and the need to meet round-the-clock power demand. The need for quality wind turbine generator suppliers in the country will only rise given the demand-supply gap and the criticality of supply in the overall wind supply chain,” Jain said. “We want a level playing field with the products manufactured in India, with no predatory pricing or offloading of products at lower pricing.”

Morgan Stanley and Barclays were advisors to the transaction.