IPO Grade 3 rating for proposed IPO of Api Power Company
Tue, Nov 25, 2014 12:00 AM on IPO/FPO News,
ShareSansar, November 25:
The upcoming IPO of Api Power Company 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).
Api Power has proposed to float an Initial Public Offer of 4,000,000 equity shares of face value of 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.
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.
Api Power Company Ltd was established in B.S 2060 Ashad 5th (19th June 2003) as private limited company being subsidiary of South Asia Engineering Pvt. Ltd under Company Act 2053. Later on the company has been converted as public limited company with major restructuring in the shareholding pattern on Jul-2013. The basic objective of the company is to generate electricity through utilization of water and other natural resources abundantly available in the country. The company was established by the same promoters of Arun Hydropower Group2, one of the leading private sector hydropower groups. The company is developing 8.5 MW Naugarh hydro electric projects. 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 total project cost is around NPR 1400million to be funded in debt to equity ratio of 70:30. Expected COD for the project is Chaitra 2071 (minApr-2015).
