SIEMENS Energy is considering selling a substantial part of its 24 per cent stake in a listed Indian affiliate to former parent Siemens as part of efforts to shore up its balance sheet, according to sources familiar with the matter.

The German turbine maker may announce the divestment of shares in Mumbai-listed Siemens as early as this week, some of the sources said, asking not to be identified because the information is private. The shares are currently worth about 3.3 billion euros (S$4.78 billion). Siemens already owns 51 per cent of the Indian business.

At the same time, Siemens is facing pressure from the government to provide loan guarantees that are critical for Siemens Energy to take on future large projects. The government is now discussing a combination of state-backed guarantees for Siemens Energy flanked by guarantees from Siemens, its largest shareholder, as well as some banks, according to sources familiar with the matter.

Last week, Siemens Energy confirmed it’s in talks with the government about loan guarantees. It’s been seeking backing worth as much as 16 billion euros for future projects after Siemens indicated it was no longer willing to help, Bloomberg News has reported.

The guarantees provided by Siemens could cover several billion euros for future projects if the Munich-based technology giant agrees to a deal despite its previously announced intention to reduce ties with the division it spun off three years ago, the sources said.

The government is ready in principle to commit as much as eight billion euros in guarantees but expects Siemens and banks to cover the rest, according to the sources.

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Deliberations are ongoing, and details of the proposals could still change. Spokespeople for Siemens Energy and Siemens declined to comment.

A spokesperson for the Economy Ministry said: “The government is in close talks with the company” that are ongoing, declining to provide further details.

Siemens Energy supervisory board chairman Joe Kaeser has pushed back against speculation the company might seek money from the state and sought to clarify the talks are limited to financial guarantees for future projects. Following the comments, shares climbed as much as 17 per cent, the steepest intraday gain since Siemens Energy started trading more than three years ago.

Siemens Energy needs the guarantees to win new large-scale contracts to build transmission networks and gas turbines. While those units are profitable, they are now threatened by the strain that the string of losses from the Spanish Gamesa wind unit is putting on the company’s balance sheet.

Financial support has become crucial after Siemens Energy earlier this year forecast a 4.5 billion euros loss for fiscal 2024 despite assurances it had finally come up with a plan to address problems with certain wind turbines at the division. S&P in July downgraded it to BBB- with a stable outlook from BBB with a negative outlook. BLOOMBERG