Mid Solu Hydropower Limited has launched its
initial public offering (IPO) for the general public from Friday. After issuing
the IPO for the local residents of the project-affected areas and Nepalis
working abroad, the IPO has now been issued for the general public.
In the first phase,
the company has issued 10 percent of the issued capital i.e. 748,400 units of
shares worth Rs 74.84 million for the local residents of the project-affected
areas and 10 percent of the shares to be issued for the general public i.e.
74,084 units of shares worth Rs 7.484 million for Nepalis in foreign
employment.
In the second phase, the company is issuing
14,968 units of shares for employees and 37,420 units for mutual funds and the
remaining 621,172 units for general investors.
How to apply for an IPO?
Applications can be made for the
IPO issued by the company till October 15. If
there are not enough applications as per the demand by that period, the issue
period will be extended till October 15.
Interested investors can apply for a minimum
of 10 units at the rate of Rs 100 per share and a maximum of 10,000 units in
the number divided by 10 points for more than that.
Applications can be made from all C ASBA
member banks and financial institutions and their designated branch offices
approved by the Securities Board of Nepal for the IPO of the company.
Similarly, applications can also be made through the MeroShare mobile app
operated by CDSC.
NIC Asia Capital Limited is the issue manager
of the company while Century Capital Limited is the guarantor.
Rating indicating average risk
ICRA Nepal Limited, a credit rating company,
has awarded iCRA NP issuer rating double B+ to the company. The rating provided
by ICRA Nepal indicates the average risk to the company's ability to bear its
financial obligations.
ICRA Nepal had awarded the rating grade
related to credit rating to the company on July 1, 2080. The tenure of this
rating will remain for one year i.e. till July 15, 2019.
What kind of company is it?
Mid Solu Hydropower Limited was registered as
a company under the Companies Act, 2063 BS at the Office of the Registrar of
Companies of the Government of Nepal. The company has been operating business
in the name of Mid Solu Hydropower Limited after turning into a public limited
company on July 1, 2018 with the aim of expanding the public participation of
the residents and general public of the project affected areas (industrial
affected areas).
The registered office of the company is located in Kathmandu District. 31 is located in New Baneshwor. Solukhumbu district is the hydropower generating center of the company. and is currently located in Solududhkunda Municipality.
Solukhumbu District Salleri G.B.S. The
Government of Nepal had obtained permission from the Ministry of Energy, Water
Resources and Irrigation to produce, produce and operate the hydropower project
with the objective of generating 9.5 MW of hydroelectricity from the central
Solu Khola Hydropower Project at solududhkunda municipality.
Nepal Electricity Authority (NEA) has signed a
power purchase agreement with NEA on August 15, 2018 to purchase electricity
generated from the Central Solukhola Hydropower Project. Also, the first
amendment to the agreement was made on February 15, 2018. The company has been regularly
producing electricity since January 1, 2019 after completing the construction
of the project.
The total cost of the project is Rs 2.08
billion. The cost per megawatt of the project is Rs 219.38 million. The general
investment repayment period of the project is 6.91 years and the withdrawal
period in the discount is 10.87 years.
Purpose of issuing IPO
The main objective is to use the proceeds from
the issue to repay the loan of the project. Similarly, the IPO has also been
issued to provide the capital required to expand the financial and economic
activities of the company and to raise the capital required for the activities
to be carried out in accordance with the objectives mentioned in the company's
management letter and regulations.
In addition, according to the provision of
selling 10 percent of the issued capital in the management of the company to
the residents of the project affected areas and 10 percent shares of the issued
capital to the general public, the company aims to sell 149.68 million shares
to the residents of the project-affected areas, the general Nepali citizens
(including employees and collective investment funds) and increase the issued
capital of the company to Rs 748.4 million.
Rs 149.68 million received by the company
through ipo issue will be used to pay the term loan taken from The Rastriya
Banijya Bank. After the payment of this amount, the bank's loan of Rs 1.32
billion will be left.
Accumulated profit of Rs 30 million in the
last fiscal year
The company has projected a consolidated
profit of Rs 30.21 million by the end of the last fiscal year i.e. fiscal year
2079/80. The company had posted a consolidated profit of Rs 9.88 million in the
fiscal year 2018/19.
Similarly, by the end of the current fiscal
year i.e. fiscal year 2080/81, the company has projected a net profit of Rs 127
million 28 thousand and a consolidated profit of Rs 235.87 million in the next
fiscal year 2082/82.
By the end of the last fiscal year, the company's earnings per share is expected to be Rs 4.4. Similarly, the company's revenue is expected to be Rs 12.94 in the current fiscal year and Rs 14.54 in the fiscal year 2081/82.
Similarly, the net worth per share of the
company is estimated to be Rs 116.97 per share from Rs 104.4 at the end of the
last fiscal year.
What is the capital structure?
At present, the authorized capital of the
company is Rs 800 million and the issued capital is Rs 748.4 million.
Similarly, the paid-up capital of the company is Rs 598.72 million.
After the issue of 1,496,800 units of shares
reserved for local residents and the general public, the paid-up capital of the
company will reach Rs 748.4 million.
After the IPO, the company's shareholding will
be 80 percent of the founder shareholders and 20 percent of the general public.
Structure of board of directors
The board of directors of the company consists
of five directors from the founder shareholders, one from the general
shareholders and one independent director.
The Board of Directors has been constituted in
accordance with the provisions of Sub-section (2) of Section 86 of the
Companies Act 2063 and Rule 27 (2) of the Company Regulations. The tenure of
directors will be maximum four years. According to rule 28 of the company's
regulations, at least 10,000 units of shares must be taken on behalf of the
founding group to be appointed to the board of directors and at least 100 units
to be appointed on behalf of the general shareholders. However, this provision
will not be applicable in the case of directors and independent directors
representing organized organizations.
At present, there are only four members
representing the founding shareholders on the board of directors of the
company. Bhim Bahadur Pal is the chairman of the board of directors of the
company. Ramesh Raj Gautam is the managing director of the company while Deepak
Raj Joshi and Prakriti Gautam are the other directors.
Future Plans and Strategies
The main objective of the company is to
establish itself as a leading company in nepal's hydropower development by the
fiscal year 2080/81. Similarly, the company plans to study the feasibility of
new hydropower projects and construct hydropower projects, produce electricity
by making maximum use of the country's water resources as per the agreement
with the government agencies and sell it to the Nepal Electricity Authority and
help the country become self-reliant in electricity and make the country prosperous.
The company has also planned to invest in hydropower projects that seem
commercially feasible to achieve the objectives mentioned in Section 4 of the
company's management letter.
Considering its capital and liabilities, the
company has devised a strategy to invest in other hydropower project companies
that are commercially viable to achieve its objectives. For this, the company's
strategy is to identify potential projects within the next fiscal year 2080/81
and start construction work. Similarly, it will study new projects and
determine whether it is suitable to invest in them, and adopt a strategy to
invest in projects that are suitable for investment. The company will also
adopt a strategy to pay special attention to getting proper returns on investment
while making investment decisions.
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