IPO alert! Much-touted IPO of Rasuwagadhi Hydropower Company worth Rs.1.02 Arba receives ICRA Grade 4+ indicating below-average fundamentals

ICRA Nepal Limited has assigned a [ICRANP] IPO Grade 4+ (Pronounced as ICRA NP IPO Grade Four Plus) to the Rs.1.02 arba worth of Initial Public Offer of Rasuwagadhi Hydropower Company Limited. Instruments with this grading are considered to have below-average fundamentals.

ICRA Nepal assigns grading on a scale of Grade 1 through Grade 5, with Grade 1 indicating strong fundamentals and Grade 5 indicating poor fundamentals. For the Grading categories 2, 3 and 4, the sign of + (plus) indicates their relative better position within the Grading categories concerned.

IPO Grade is not a recommendation to buy, sell or hold securities nor is it a comment on the price or valuation of securities.

The hydropower company has total capital of Rs 684.21 crore out of which 15% will be issued to the general public of Rs.102.63 crores and 10% to the people of project affected areas of Rs. 68.42 crores. Upon request from the locals and officials, SEBON had allowed the company to issue shares to general public first and then to the people of the project affected area.

The first stage IPO issue of Rasuwagadhi was able to collect Rs 675 crore from tentative 2 lakh applicants which was 5.06 times oversubscribed of the total issue. The first phase IPO was open for 1,33,42,095 units shares i.e. 19.5% of the total paid up capital from (Falgun 11, 2074) to (Falgun 30, 2074) for staffs having membership of Employees Provident Fund.

Likewise, in the second stage Rs.7,38,85,000 were collected from 585 employees of Employees Provident Fund. The issue was open for Rs.6,84,21,000 or 6,84,210 units i.e. 1% of the paid up capital. It was oversubscribed by 1.07 times.

Similarly, from the employees of promoter institution, the hydropower company had collected Rs.43,93,73,000 from 8,986 employees. The issue was open for Rs.23,94,73,500 or 23,94,735 units i.e. for 3.5% of the paid up capital. It got oversubscribed by about 1.83 times.

Siddhartha Capital is the issue manager for the IPO issuance of Rasuwagadhi Hydropower Company, along with co-issue management of Sunrise Capital, Global IME Capital, NMB Capital, Civil Capital and Prabhu Capital.

The project is estimated to be completed by 2020 AD. Currently, there are 33 technicians and 700 worker (including 245 Chinese) working in the project. The Chinese construction company CWE China has prioritized the construction of tunnel.

The construction of the project had started back in 2014 AD which was delayed due to many factors like shortage of petroleum product, earthquake, landslide in the nearby area and such.

The project has a capacity to produce 111 MW electricity annually. The cost of the project has been estimated to be Rs 16.78 arba.