IPO Grade 4 rating for proposed IPO of Barun Hydropower

ShareSansar, December 1:

The upcoming IPO of Barun Hydropower Company Limited has received Grade 4 rating from ICRA Nepal, indicating the company’s below average fundamentals. ICRA Nepal assigns IPO grading on a scale of 1 (strong) to 5 (poor).

The grading assigned is constrained by the weak operational performance of 4,500 KW Hewa Khola HEP (Hydro Electricity Project), which coupled with the high financial leverage, has resulted in weak earnings and insufficient cash flows.

Barun Hydro has proposed to float an Initial Public Offer of 4,86,000 equity shares of face value of Rs 100 each.

The company is operating 4,500 KW Hewa Khola HEP in Shankhuwasabha District of Eastern Nepal since August 2011. The major promoters of BHCL include Mr. Shailendra Guragain & Family (~30%), Mr. Deda Raj Khadka and family (~5%), Mr. Arjun Gautam and family (2%).

The company has already issued shares worth NPR 24.30 million at par value to the project affected local population of Shankhuwasabha District. At present, the public shareholding in the company stands at 12.5% which is expected to reach 30% post IPO.