Sahas Urja Limited issues IPO for general public from Ashoj 6

A new hydro power has come up in Nepali Share market. Sahas Urja Limited is issuing IPO to general public after allotment to the local people. There is craze to IPOs these days and this IPO is also one you should not miss.

 Company Profile:

Sahas Urja Limited Company was incorporated in February 2014 as a private limited company, Sahas Urja Limited (Sahas) was converted to a public limited company in September 2014 to facilitate public participation. Sahas Urja Ltd. commits to create superior value for all its shareholders and stakeholders and aimed to be among most admired and trusted company in the country. It has planned to contribute to the national economy through accelerated hydropower development.

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Hydro Venture Pvt. Ltd. (HVPL), a limited liability company,was established with the main objective to develop, build and operate hydroelectric project in Nepal. The company from its very beginning was focusing on the development of the Solu Khola (Dudh Koshi) Hydroelectric Project. The company had completed Feasibility Study, Environmental Impact Assessmentand Connection Agreement, obtained Generation License from Department of Energy Development (DoED) and finally concluded a Power Purchase Agreement (PPA) with Nepal Electricity Authority on 25th February 2015. Regardless of the license of the Solu Khola (Dudh Koshi) Hydroelectric Project (SKDKHEP) under Hydro Venture Pvt. Ltd., (a 100% subsidiary of Sahas Urja Ltd) the project was being developed by the Sahas Urja Limited (SUL). At this point HVPL has been completely acquired by (SUL) with the endorsement from Company Registrar’s Office (Received on 12th March 2017), licenses transferring process from HVPL to SUL was completed on 2074/1/29 B.S

The paid-up capital of the company as of mid-July 2020 was NPR 2,450 million. The major promoters include Mr. Mahendra Kumar Giri (2.29% stake), Mr. Sushil Thapa (2.11%), Ms. Anupama Thapa (2.04%), and Mr. Him Prasad Pathak (1.94%), among others. The company plans to raise NPR 1,050 million, i.e., 30% of the total equity from general shareholders, through the proposed IPO issue. It is developing an 86-MW Solu Khola (Dudh Koshi) HEP in Solukhumbu District, Province 1 of Nepal. The project is a run-of-the-river (R-o-R) type and is being developed at a 40.70% probability of exceedance (Q40.70).

About the IPO ssue of Sahas Urja Limited Company:

Sahas Urja Limited is issuing 7,000,000 units (70 Lakhs) of ordinary shares worth Rs. 70 crores to the general public from Ashwin 6. The closing date of this IPO issue is set on Ashwin 10, 2078. If the IPO is not subscribed till Ashwin 10, 2078 then the issue will be extended up to Ashwin20, 2078 as per the notice issued by the company.

The company is about to issue a total of 7,000,000 units of shares i.e., 20% of the total issued capital from Ashwin-06, 2078. From the total of 7,000,000 units, 350,000 units i.e., 5% are for the Mutual Fund. 3% of the total units i.e., 210,000 units are for the employee of the company, and the remaining 6,440,000 units are for the general public.

Applications can be placed for a minimum of 10 units and a maximum of 1,050,000 units.

NIBL Ace Capital Limited has been appointed as the issue manager for the IPO issuance of this company.

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ICRA Rating:

ICRA Nepal has assigned an issuer rating of [ICRANP-IR] BB+ (pronounced ICRA NP issuer rating double B plus) to Sahas Urja Limited (Sahas).

Credit Strengths:

  • Prior experience of promoters in hydropower sector provides comfort
  • Return and coverage indicators expected t remain supported by lower project cost
  • Low funding risk at current cost estimates
  • Lower evacuation risk
  • Low tariff and offtake risks with presence of long-term PPA at predetermined tariffs and escalations

Credit Challenges:

  • High project execution risks
  • Delay in project completion could result in cost escalation, tariff escalation loss and late COD penalty
  • High hydrology risks, given lack of deemed generation clause in PPA

(Source: ICRA Nepal)

How much to apply for the IPO of Sahas Urja Limited?

When we observe the current trend , investors have shown a high level of confidence in Hydro sector, which is shown by the huge demand for the last few months. Almost all of the stocks have been trading significantly higher than they were before lockdown. 

So, when we look at the current trend of IPO in the market, we see that more than 25 lakhs of investors have been applying in the recent issue’s which is a huge number when we compare it with past applicants. This shows that, even if a quarter of this number applied for the issue of Shas Urja Limited (URJA), the issue will be oversubscribed. Since the "10 kitta rule" still holds true for IPO; 700,000 applicants will be lucky enough to get the 10 unit shares of Sahars Urja Limited. So, it is advisable to apply only 10 units.  

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