Siemens Energy considers sale of stake in Indian affiliate to Siemens AG 

Siemens Energy AG is deliberating to sell a significant portion of its 24 per cent stake in a publicly-traded Indian affiliate to its former parent, Siemens AG. This potential move is part of Siemens Energy's efforts to fortify its balance sheet, Bloomberg reported.

The report cited sources familiar with the matter, who disclosed that the turbine manufacturer may make an announcement regarding the divestment of shares in Siemens Ltd., which is listed on the Mumbai stock exchange, as early as this week. The current value of these shares is approximately €3.3 billion ($3.5 billion). It's worth noting that Siemens AG already owns a majority stake of 51 per cent in the Indian business.

Government pressure on Siemens for loan guarantees

Simultaneously, Siemens is under governmental pressure to provide loan guarantees, which are deemed critical for Siemens Energy to undertake significant future projects. The government is reportedly discussing a combination of state-backed guarantees for Siemens Energy, supplemented by guarantees from Siemens, which is the largest shareholder, as well as some banks.

Discussions surrounding these potential guarantees are ongoing, and the terms of the proposals remain subject to change. While the government is open to committing up to €8 billion ($8.5 billion) in guarantees, it anticipates that Siemens and financial institutions will contribute the rest. This situation arises as Siemens Energy has been seeking support of up to €16 billion ($17 billion) for forthcoming projects after Siemens had previously indicated it was no longer willing to assist. Siemens Energy Supervisory Board Chairman, Joe Kaeser has emphasised that the talks are solely focused on financial guarantees for future projects, not a financial bailout.

Crucial guarantees to secure future projects

Siemens Energy's need for financial guarantees is tied to its ability to secure new large-scale contracts for the construction of transmission networks and gas turbines. While these units remain profitable, they are now confronted with challenges stemming from the financial pressures exerted by losses incurred by the Spanish Gamesa wind unit. Siemens Energy had previously forecasted a €4.5 billion ($4.78 billion) loss for fiscal year2024, despite efforts to address issues with specific wind turbines.

(With inputs from Bloomberg)

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