A seires of Hydropower company's IPO is being issued in the month of Ahwin this year. Nyadi Hydropwer Limited's IPO is issued to general public from today. Similarly, people will be able to apply for Madhya Bhotekoshi's IPO after the completion of issuance of this IPO.
Company Profile of Nyadi Hydropower Limited:
Nyadi Hydropower Limited is a public company, incorporated on March 1, 2007. It is promoted by Butwal Power Company Limited (BPCL) and Lamjung Electricity Development Company Ltd. (LEDCO) for setting up a 30 MW run-of-river, Nyadi Hydropower Project (NHP) in Marshyangdi Municipality, Lamjung district of Nepal. The power project is proposed to utilize the available head and flow from Nyadi River. The project is constructed under the BOOT (Build, Own, Operate, and Transfer) mechanism. As per the Generation License, from the Government of Nepal – Ministry of Energy, obtained on February 14, 2013, the project shall be handed, on whatever conditions the project is, to the Government of Nepal after the expiry of the Generation License, which is 35 years.
The Project was first identified in 1993 as part of the Small Hydropower Master Plan. The initial capacity of the Project was 2.8 MW which was later optimized at 20 MW after the feasibility study. The feasibility study of the project was carried out by Lamjung Electricity Development Company (LEDCO) in the year 2000.
In October 2006, BPC and LEDCO had an understanding to develop the Nyadi Hydropower Project (NHP) jointly. BPC acquired this project from LEDCO in December 27, 2006. As per agreement made between BPC and LEDCO, a SPV named Nyadi Hydropower Limited (NHL) was established on 2063/11/17 to undertake the NHP independently. BPC is the major shareholder in NHL. After further investigations and re-optimization study, the project was optimized at 30 MW. Feasibility study of NHP (30 MW) was completed by NHL in October 2010.
About the Issue of IPO of Nyadi Hydropower Limited
Nyadi Hydropower Limited is issuing 2,250,000 units of ordinary shares worth Rs. 22.5 crores to the general public from Ashwin-15, 2078. The early closing date of this IPO issue is on Ashwin-20, 2078. If this issue is not subscribed till Ashwin-20, 2078 then the issue will be extended up to Ashwin-31, 2078.
The company is set to issue a total of 2,250,000 units of shares i.e., 15% of the total issued capital from Ashwin 15, 2078. From the total of 2,250,000 units, 112,500 units i.e., 5% are for the Mutual Fund. 2% of the total units i.e., 45,000 units are for the employee of the company, and the remaining 2,092,500 units are for the general public.
Applications can be placed for a minimum of 10 units and a maximum of 50,000 units.
Global IME Capital Limited has been appointed as the issue manager for the IPO issuance.
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ICRA Rating:
CARE Ratings Nepal Limited (CRNL) has assigned an Issuer rating of ‘CARE-NP BBB – (Is) [Pronounced triple B Minus (Issuer Rating)]’ to Ngadi Group Power Limited. Issuers with this rating are considered to have a moderate degree of safety regarding timely servicing of financial obligations, in Nepal.
Credit Weakness:
- Project implementation risk and stabilization risk associated with the project and relatively high project cost
- Hydrology risk associated with run-of-river power generation
- Exposure to regulatory risk
Credit Strengths:
- Experienced Board Members and management team
- Associated with a group having multiple hydropower projects
- Power purchase agreement with sufficient period coverage
- Financial closure achieved for the full project cost
- Low power evacuation risk
- Moderate counterparty risk
- Power demand & supply gap coupled with the increasing demand for power in the country
- Government support for the power sector
(Source: ICRA Nepal)
So, The question is How much to apply for this IPO of Nyadi Hydropwoer Limited?
When we observe the current scenario, investors have shown a high level of confidence, 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.
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 Nyadi Hydropower Limited, the issue will be oversubscribed.
Since the "10 kitta rule" still holds true for IPO; 209,250 applicants will be lucky enough to get the 10-unit shares of Nyadi Hydropower Limited. So, it is advisable to apply only 10 units.
