Things to know for prospective investors about IPO of Greenlife Hydropower Limited; high chance of lottery for 10 units
Thu, Feb 4, 2021 12:22 PM on IPO/FPO News, Company Analysis, Exclusive,
Company Profile:
Green Life Hydropower Limited (GLH) was established in 2009 to develop, construct and operate power projects in Nepal. It is promoted by institutional promotes and individual promoters from different background for setting up 40 MW run-of-river, Khani Khola 1 Hydropower Project in Dolakha District of Nepal. The power project is proposed to be constructed in 2 phases. In the first phase, the generation capacity will be 25 MW by utilizing discharge from Khani Khola which will be upgraded to 40 MW in the second phase by adding discharge from Hanapu Khola and Napke Khola.
About the Issue:
GreenLife Hydropower Company Limited is issuing 3,496,400 units of ordinary shares worth Rs. 34.96 crores to the general public from Magh-23. The early closing date of this IPO issue is on Magh-27, 2077. If this issue is not subscribed till Magh-27, 2077 then the issue will be extended up to Falgun-07, 2077.
Out of the total issue offered i.e., 3,496,400 units; 2% of the issue i.e., 69,928 units have been allotted for the employees of the company and 5% of the total issue i.e., 174,820 units have been allotted for the mutual fund. The remaining 3,251,652 units are for the general public.
Applications can be placed for a minimum of 10 units and a maximum of 100,000 units. BOK Capital Limited has been appointed as the issue manager for the IPO issuance.
After the IPO issue, public holding will be 20% (including locals of the affected area) and promoters holding will be 80%.
Greenlife Hydropower Company Limited:
|
Particulars |
Percentage |
Units |
Amount |
|---|---|---|---|
|
Total Capital |
100% |
14,400,000 |
1,440,000,000 |
|
Total Issue (Inc Unsubscribed Local IPO) |
19.42% |
3,496,400 |
349,640,000 |
|
Employees |
2% of IPO Shares |
69,928 |
6,992,800.00 |
|
Mutual Fund |
5% of IPO Shares |
174,820 |
17,482,000.00 |
|
General Public |
93% of IPO Shares |
3,251,652 |
325,165,200.00 |
|
Issue Manager |
BOK Capital |
||
|
Issue Open Date |
Magh 23, 2077 |
||
|
Issue Closing Date (earliest) |
Magh 27, 2077 |
||
|
Issue Closing Date (Late) |
Falgun 07, 2077 |
||
|
Minimum Application |
10 |
||
|
Maximum Application |
100,000 |
CARE Rating:
Care Rating Nepal (CRNL) has assigned grading of ‘CARE-NP IPO Grade 4’ to the proposed Initial Public Offer (IPO) of Greenlife Hydropower Ltd (GLH). ‘CARE-NP IPO Grade 4’ indicates Below Average Fundamentals. CRNL assigns IPO grades on a scale of Grade 1 to Grade 5, with Grade 1 indicating strong fundamentals and Grade 5 indicating poor fundamentals.
Key Grading Strengths:
- The power purchase agreement with sufficient period coverage
- Moderate counterparty risk
- Financial closure achieved for a major portion of the debt component
- Shortage of power in the country
- Government support for the power sector
Key Grading Weakness:
- Significant cost and time overrun in the project
- Project implementation and stabilization risk
- The decrease in project life and low tariff rate for a major part of contracted energy leading to low return from the project
- Promoter group having limited experience in the hydropower sector
- Exposure to fluctuation in foreign currency exchange rates and volatile rate
- Hydrology risk associated with run-of-river power generation
- Power evacuation risk
Capital Structure:
|
Authorized Capital |
2,500,000,000.00 |
|
Issued Capital |
1,800,000,000.00 |
|
Current Paid-Up Capital |
1,440,000,000.00 |
|
Capital after IPO Issuance |
1,800,000,000.00 |
Shareholding Structure:
|
|
Number of Shares |
Amount |
Percentage |
Remarks |
|---|---|---|---|---|
|
Promoters Shareholders |
14,400,000.00 |
1,440,000,000.00 |
80% |
Already Issued |
|
Project affected locals |
1,030,600.00 |
10,360,000.00 |
0.58% |
To be Issued |
|
General Public |
3,496,400.00 |
349,640,000.00 |
19.42% |
To be Issued |
Board of Directors:
|
Board of Directors |
|
|---|---|
|
Name |
Position |
|
Mrs. Yangchen Dolma Lama |
Chairman |
|
Mrs. Kesand Diki Lama |
Director |
|
Mrs. Bhusan Thapa |
Director |
|
Ms. Cheten Wangel Khadkar Lama |
Director |
|
Mr. Dharmendar Agrawal |
Director |
|
Mr. Tenzing Jampe Lama |
Director |
Projects:
|
Name of Project |
Khani Khola 1 Hydropower Project |
|
Type of Project |
Run-Of-River |
|
Installed Capacity |
40 MW |
|
Annual Energy Generation |
229.50 GWh |
|
Annual Dry Energy |
33.53 GWh |
|
Annual Wet Energy |
195.97 GWh |
|
Total Cost |
7,653,890,784 |
|
Cost per Megawatt |
191,347,270 |
Financial Highlights:
|
Particulars |
Actual |
Estimated |
||||
|---|---|---|---|---|---|---|
|
2074/2075 |
2075/2076 |
2076/2077 |
2077/2078 |
2078/2079 |
2079/2080 |
|
|
Total Paid-Up Capital ('000) |
1,440,000.00 |
1,450,360.00 |
1,450,360.00 |
1,800,000.00 |
1,800,000.00 |
1,800,000.00 |
|
Reserve & Surplus ('000) |
0.00 |
0.00 |
0.00 |
-23,746.00 |
105,130.00 |
263,414.00 |
|
Debt ('000) |
213,129.00 |
426,847.00 |
558,273.00 |
190,054.00 |
63,791.00 |
65,678.00 |
|
Revenue ('000) |
0.00 |
0.00 |
0.00 |
172,361.00 |
1,093,559.00 |
1,125,903.00 |
|
Interest Expenses ('000) |
0.00 |
0.00 |
0.00 |
116,357.00 |
570,119.00 |
565,113.00 |
|
Net Profit ('0000 |
0.00 |
0.00 |
0.00 |
-23,746.00 |
128,876.00 |
158,284.00 |
|
Earnings per share (Rs.) |
0 |
0 |
0 |
-1.32 |
7.16 |
8.79 |
|
Net worth per share (Rs.) |
100 |
99.67 |
99.67 |
98.33 |
105.49 |
114.29 |
|
Debt-Equity (times) |
0.15 |
0.29 |
0.38 |
0.11 |
0.03 |
0.03 |
|
Return on Equity (%) |
0.00% |
0.00% |
0.00% |
-1.34% |
6.76% |
7.67% |
Conclusion:
Hydropower is considered one of the most important sectors for the development of the economy because of its huge potential to generate electricity which can be sold to other countries benefitting the economy.
That being said, for the last few years, hydropower stocks in the stock market were not digested by the investors in the market for numerous reasons; some of them being the loss of craze for the investors in the hydropower stocks, the trend for the hydro stocks in the market was over which is why most of the stocks were trading below their par value of Rs. 100.
However, when we observe the current scenario, investors have been interested in this sector again, which is shown by the huge demand for the last few months. Almost all of the stocks have been trading above their par value signifying the high level of confidence in the sector.
When we look at the current trend of IPO in the market, we see that more than 15 lakhs 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 Greenlife Hydropower Company Limited (GLH), the issue will be oversubscribed. Since 10 kitta rule exists for IPO; 3,25,165 applicants will be lucky enough to get the 10 shares of Greenlife Hydropower. So, it is advisable to apply only 10 units.
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