To cash in on the growing attraction of public toward primary issues, Barun Hydropower Company Ltd (BHCL) is floating its initial public offering (IPO) worth Rs 48.6 million next week.
Securities Board of Nepal (Sebon) has given approval to the company to issue 486,000 units of shares to general public. “The company had sought permission from Sebon to issue its shares to public around one and half months ago. We recently gave the company go-ahead to launch its IPO,” Niraj Giri, spokesperson of Sebon, told Republica.
Officials of BHCL said they will collect Rs 48.6 million from the market by floating 486,000 units of shares with face value of Rs 100 each.
Following the IPO, public will hold 30 percent stake in the company, including 10 percent shares, or 243,000 units, which were floated to locals of the project affected area in June last year.
Civil Capital is the issue manager of the BHCL.
Bhisma Raj Chalise, CEO of Civil Capital, told Republica that application for the shares will be opened after a week. “We filed prospectus at the Office of the Company Registrar on Friday. The prospectus will be published on Sunday and the application for shares will be opened after seven days,” added Chalise.
He told Republica that 24,300 units has been allocated for the mutual funds and other 2 percent of 486,000 units to the staff members of BHCL.
The 4.5-MW project is based in Hewakhola of Sankhuwasabha. The project started power generation from August 6, 2011.
Established on January 20, 2004, the company had signed Power Purchase Agreement (PPA) with Nepal Electricity Authority (NEA) on September 19, 2007. The company has authorized capital of Rs 350 million and paid-up capital of Rs 243 million (after adjustment of public shares).
ICRA-Nepal, a credit rating agency, has assigned “[ICRANP] IPO Grade 4” rating to the IPO of BHCL. The rating indicates below average fundamentals to the IPO.
BHPL Chairman Shailendra Guragain told Republica that the company plans to use amount generated from IPO to repayment of long-term bank borrowings. The promoters of BHPL are also involved with Arun Valley Hydropower Group, Upper Hewakhola Hydropower Project, Down Tiluwa Hydropower Project and Dordi Hydropower Project, among others.
Anjan Raj Poudyal, former vice president of Stock Brokers Association of Nepal (SBAN), told Republica that people´s attraction toward IPO has grown in recent months. “As all the commercial banks have already floated their IPO, public are now keeping tab on shares of the hydropower companies,” he added.
Upper Tamakoshi Hydropower Ltd (UTKHPL) is also planning to issue 36.06 million units of shares to locals of Dolakha, staff of Nepal Electricity Authority (NEA), UTKHPL, lending institutions and the borrowers of the Employees Provident Fund (EPF) from first week. It will be the biggest public offering in the country so far.