Green Investing and Indian Investors: The Case of Suzlon Energy

In the early 2000s, ‘green investing’ caught the fancy of investors worldwide as they realized that being environmentally conscious could also be financially rewarding. The Suzlon Energy Initial Public Offering (IPO) in India in September 2005 received much attention, and was oversubscribed nearly 25 times. Many investors regarded Suzlon as a green investment opportunity, and the stock touched record high levels over the next three years of its listing. However, some large and highly leveraged acquisitions made with the objective of achieving fast growth led to major financial distress for the company. The race to capture new markets with new products also led to compromises on product quality and customer service. A good business model was damaged by bad investment decisions, and stock prices declined steadily. Suzlon disappeared from the radar of green investors till an acquisition 23 per cent stake in Suzlon Energy by a strategic investor revived the market’s interest in this stock. This paper is a case study of how, despite being a green business with great potential, Suzlon took on risks that led to major losses for its investors, and lessons for green investors of India.