IPO Grade 3 for Sanima Mai Hydro IPO , Likely to issue within the First Week of Bhadra

ShareSansar, Aug 5:

The upcoming IPO of Sanima Mai Hydropower Limited has received Grade 3 rating from ICRA Nepal, indicating the company’s average fundamentals. ICRA Nepal assigns IPO grading on a scale of 1 (strong) to 5 (poor).

SMHL has proposed to float an Initial Public Offer of 2,110,000 equity shares of face value Rs 100 each.

As per ICRA Nepal, the factors taken into account for assigning average fundamental grading to the IPO are: the rich experience of the promoters and management personnel in the field of hydropower and reduced risks in view of significant progress made in project construction and a Power Purchase Agreement already in place.

In addition, as the promoters have infused equity upfront, the company is expected to save on its IDC (Interest During Construction), which will also be helped by low interest rates prevailing currently.

The grading factors include the risk arising out of delay in construction of transmission line by NEA. Although the management is in discussion with NEA and is exploring alternate temporary evacuation arrangements, timely construction of the transmission line will be a key factor in determining the returns generated by the project.

Sanima Mai Hydropower Limited is developing 2 hydro power projects with aggregate capacity of 29 MW. Phase I of the project is of capacity 22 MW and is expected to commission in July 2014 while Phase II of the project is of capacity 7 MW and is expected to commission in July 2015. The project cost for the entire 29 MW project is NRs 4375.8 million.

Sanima Mai Hydropower Ltd (SMHL) is promoted by a group of veteran Non Resident Nepalese professionals who have extensive experience in a number of industries which include banking, insurance, real estate, engineering, construction. The main promoters group own 65.36% % of the shares either through direct holding or through group companies and balance is held by other individual promoters.

The company has got a generation license for 35 years which includes the period of construction. The project is being developed on Build Own Operate Transfer (BOOT) basis.

The generation license was acquired on August 29, 2010.

The issuance of this IPO is likely to be within the first week of Bhadra as per the information obtained from the NCM Merchant Banking Limited which is the issue manager of this IPO.

As per them, the related document for the issuance of IPO has been submitted to SEBON and currently they are waiting for the final node from the SEBON.