Suzlon Energy has taken a significant step in its strategy to become asset-light and better fund its growing order book by finalizing a ₹440 crore sale-and-leaseback deal for its corporate headquarters, ‘One Earth.’ The transaction, announced by the company, involves the sale of the Pune property to OE Business Park Private Limited, a special purpose vehicle managed by 360 ONE Alternates Asset Management Limited.
Suzlon Energy’s Sale-and-Leaseback Arrangement
Formalized on September 4, the deal allows Suzlon Energy to lease back the office space for up to five years. This arrangement enables Suzlon to continue its operations at the same location while monetizing a non-core asset. The sale-and-leaseback deal is a strategic move designed to enhance Suzlon-Energy’s financial flexibility and support its core business activities.
Himanshu Mody, Chief Financial Officer of Suzlon Energy, explained that the transaction has been under consideration for some time. “This transaction has been in the works for some time. We decided to proceed with it to fund our core business,” Mody said. The sale of the corporate headquarters is part of Suzlon-Energy’s broader strategy to focus on core manufacturing activities and strengthen its financial stability.
Impact on Suzlon Energy’s Operations and Financial Stability
The sale of ‘One Earth’ is aligned with Suzlon-Energy’s efforts to streamline operations and improve liquidity amid increasing competition in the renewable energy sector. As India ramps up its renewable energy capacity to meet ambitious climate goals, Suzlon Energy is positioning itself to remain competitive by enhancing its financial stability.
Suzlon Energy retains the right to repurchase the asset through a call option, while the new owners have a put option to sell the property back to Suzlon under agreed terms. This flexibility ensures that Suzlon-Energy can potentially reclaim the asset if needed, depending on future business needs and market conditions.
The recent sale-and-leaseback transaction underscores Suzlon-Energy’s commitment to optimizing its asset base and focusing on its core business areas. Last month, Suzlon Energy also made headlines with its acquisition of a 76 percent stake in Renom Energy Services for ₹400 crore. This strategic acquisition aims to bolster Suzlon-Energy’s operation and maintenance (O&M) services in the wind energy sector.
As of the end of Q1 FY25 in June 2024, Suzlon Energy’s order book stood at 3.8 gigawatts (GW), reflecting the company’s robust business pipeline and ongoing projects. With the debt cleared, Suzlon Energy is now concentrating on making strategic decisions that will support its growth and deliver sustainable value to stakeholders.
Looking ahead, Suzlon-Energy plans to actively pursue both organic and inorganic growth opportunities. Mody emphasized that the company is focused on leveraging its strengthened financial position to explore new growth avenues and further its commitment to creating value for stakeholders.
Overall, the ₹440 crore sale-and-leaseback deal for Suzlon Energy’s corporate headquarters represents a strategic maneuver to enhance financial flexibility and support the company’s core business operations. By monetizing non-core assets and focusing on its core manufacturing activities, Suzlon Energy aims to strengthen its position in the competitive renewable energy sector and continue its contribution to India’s renewable energy goals.
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