HIDCL to make largest ever public offering to raise Rs2 billion
KATHMANDU, Oct 29: Hydroelectricity Investment and Development Company Limited (HIDCL) is floating 19 million units of primary shares to public, starting Thursday.
The state-owned hydropower investment company, which has already allotted one million units of shares to six mutual funds, is floating 400,000 units of primary shares to its staff and remaining 18.6 million units to general public. The face value of the share is Rs 100.
The company plans to raise Rs 2 billion from the IPO.
Established as a public investment company on July 6, 2011, 80 percent of the company’s shares are held by the government (50 percent) and three state-owned companies (30 percent). Public will have 20 percent stake in the hydropower investment company.
The government established HIDCL, realizing the need of a special agency with huge financial might, professional expertise, and single-point agenda that could implement its hydropower development programs.
According to Deepak Rauniar, CEO of HIDCL, the company has already started making investments in eight hydropower projects ranging from 20 MW to 82 MW capacity including Lower Solu and Dordi Khola hydropower projects. He said that the money raised from the IPO will be utilized for company’s business expansion. “As we are working on strong fundamentals, we are optimistic that the shares of the company will be fully subscribed,” Rauniar said.
ICRA Nepal has, however, assigned ‘[ICRANP] IPO Grade 3’ rating to the shares of the HIDCL, indicating average fundamentals. ICRA Nepal has attributed a number of constraints to the grading it assigned to the IPO of the company.
“The grading is constrained due to HIDCL’s concentrated portfolio toward green field power generation projects, lack of regulatory framework considering HIDCL is the first company of its kind in Nepal, inherent risks in infrastructure financing, including development risks , evacuation risks (possible delays in construction of transmission line by Nepal Electricity Authority), and developer risks owing to the limited experience in commissioning power projects resulting in possibility of time and cost overruns and hence impairing the ability of the projects to timely service their debt obligations,” a press release issued by ICRA Nepal states.
According to HIDCL, public will be able to apply for a minimum of 50 units of primary shares while the maximum limit has been set at five million units. Application forms can be collected and submitted from 30 collection centers across the country. Citizens Investment Trust is the lead issue manager while NCM Merchant Banking Ltd and NMB Capital Ltd are the co-issue managers of the IPO. The application will be opened till next Thursday, according to the company.
Investment attraction toward IPO is growing in recent years as thousands of public throng collection centers to subscribe public offering of various companies. Analysts attribute the face value of Rs 100 per unit for shares, which they can sell at higher prices in the secondary market, lack of good investment alternatives, falling interest rates in bank deposits, and growing awareness about the capital market to the rise in attraction of public toward IPOs.
According to data of Securities Board of Nepal (Sebon), a total of 28 companies acquired permission from the capital market regulator to float their primary shares or debentures worth of Rs 6.66 billion in the last fiscal year, up from Rs 3.02 billion of IPOs and debentures of 20 companies in 2013/14.
Click here to View HIDCL Hydro Power IPO Application Center in Kathmandu Valley and Outside of Valley in Nepal | Hydropower IPO Share Application Form Collection Counter