CRNL has assigned grading of ‘CARE-NP IPO Grade 4’ to the proposed Initial Public Offer (IPO) of Nyadi Hydropower Limited (NHL). ‘CARE-NP IPO Grade 4’ indicates Below Average Fundamentals. NHL proposes to issue 4.05 Million shares of face value of Rs.100 each at par aggregating Rs.405.00 Million.
The grading assigned to NHL is constrained by project implementation risk and stabilization risk associated with the project, exposure to volatile interest rates, foreign exchange fluctuation risk and power evacuation risk. The grading also factors in hydrology risk associated with run of the river power projects.
The grading, however, derives strength from experienced board members and management team in hydropower sector, power purchase agreement (PPA) with sufficient period coverage and financial closure achieved for the project cost. Further, grading is supported by NHL’s association with group having multiple hydropower projects, moderate counter party risk, shortage of power in the country and government support for the power sector.
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 available head and flow from Nyadi River. The project is constructed under BOOT (Build, Own, Operate and Transfer) mechanism. As per the Generation License, from 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 expiry of Generation License, which is 35 years.
Source: Care Ratings Nepal Limited