Gamesa Corp. Tecnologica SA, Europe's second-largest wind-turbine maker, agreed to supply $2 billion of wind turbines to Indian renewable-energy developer Caparo Energy Ltd. (CEL) in the nation's largest order ever.
Spain's biggest windmill manufacturer said it will deliver the turbines by 2016 in a press release today. The 2,000- megawatt order is India's largest to date, according to Bloomberg New Energy Finance.
"It's for about $2 billion," Ramesh Kymal, managing director of Gamesa's India unit, told a press conference in Mumbai. "We've received an upfront payment in line with normal commercial terms."
Europe's wind-turbine makers face a home market that's still depressed by the financial crisis and are stepping up sales in India, which installed the most new wind capacity last year behind China and the U.S. The companies are challenging the market dominance of Indian manufacturer Suzlon Energy Ltd.. (SUEL)
Gamesa's shares rose as much as 2.9 percent in Madrid, the most since May 13, and traded at 6.39 euros, up 1.7 percent, as of 12:25 local time. London-listed Caparo, whose investors include Blackrock Inc. (BLK), the world's biggest asset manager, fell 0.1 percent to 93.38 pounds.
In 18 months since entering India, Gamesa has become the third-biggest supplier after grabbing 10 percent of installations in the fiscal year ended March 31, according to the Indian Wind Turbine Manufacturers Association. Suzlon installed 41 percent of the 2,351 megawatts of new capacity followed by Enercon GmbH's Indian unit with 21 percent.
Caparo Financing
Guernsey, U.K.-based Caparo aims to develop as much as 5,000 megawatts of capacity in India by 2017. Chief Executive Ravi Kailas told reporters today that Caparo's first 100 megawatts of capacity begin operating in June. It's part of a $1.28 billion order for 1,000 megawatts of turbines placed with Suzlon in January.
Morgan Stanley (MS) is helping Caparo to raise mezzanine loans to fund 600 megawatts, Caparo Chief Executive Officer Ravi Kailas told reporters. Mezzanine debt is a type of leveraged loan repaid after senior loans in a default.
"We hope to close soon," he said. It has drawn down part of the 4.5 billion rupee ($101.5 million) loan it got from Infrastructure Development Finance Co. last year, he said.
The company only has sufficient cash to build about 195 megawatts and may need to raise 195 million pounds by early 2012 to meet its targets, Mark Thompson, a London-based analyst for Religare Institutional Research, said in a note on April 13.
New Growth Models
Gamesa is boosting sales in India, Brazil and China as demand dwindles in Europe. Chief Executive Officer Jorge Calvet said in February the company, whose stock has increased about 12 percent this year, may make no sales in 2011 in its home market of Spain, which accounted for a third of revenue in 2009.
Under the deal, Caparo will obtain all land and permits for the wind farms, while Gamesa will supply and erect the turbines. That differs from the usual model in India led by Suzlon, which develops projects from start to finish for customers.
"In most places in the world, you have developers that do the actual execution on the site and you have the machine supplier," Kymal said. "In my opinion, that's the way we are going to go in the future and this is the first step."
Gamesa will supply its 850-kilowatt G58 turbine to Caparo for the first 150 megawatts to be erected starting next year, Kymal said. Later, Gamesa will supply its 2-megawatt G97 turbine, which it plans to start manufacturing in India in the first quarter of 2012, he said. Sites are still be selected, Kailas said.
