Stalled Chilime IPO plan all set to materialise
Fri, May 20, 2011 12:00 AM on Others,
KATHMANDU, MAY 20 -
The initial public offering (IPO) of Chilime Hydro Power Company Limited (CHCL) has finally materialized after being stalled for almost two years.
CHCL has announced that 1.34 million ordinary shares worth Rs 548.83 million will be opened to the general public from May 31. The shares are being offered at a premium of Rs 408.36 per share over the face value of Rs 100 per share. CHCL has become the first hydropower company to issue shares at a premium.
CHCL had decided to go for an IPO in 2009, but the plan stalled when locals from Rasuwa filed a case at the Supreme Court demanding that the company allocate 10 percent of the shares to them. In response to the public interest litigation, the Supreme Court issued a stay order halting the proposed IPO.
In 2009, the Securities Board of Nepal (Sebon) had granted permission to the company to issue 2.34 million shares at a premium to increase its share capital to Rs 960 million. The deadlock was resolved after Sebon amended the Securities Registration and Issuance Regulation 2065 allowing Rasuwa locals to get 10 percent of the share issue. Earlier, Sebon had approved allocating 5 percent of the shares to the locals.
About six months ago, the hydropower company had offered 960,000 ordinary shares to the locals of Rasuwa where the 22.1 MW project is located. Out of the total 960,000 shares earmarked for Rasuwa locals, 636,000 units were awarded to the inhabitants of three project-affected VDCs—Goljung, Chilime and Syafru—while the remaining 624,000 units were allocated to locals of 15 other VDCs. Locals of the project-affected VDCs got shares at the face value of Rs 100 per unit.
Rabindra Bhattarai, a stock analyst, said that CHCL’s IPO would be fully subscribed despite a protracted liquidity crisis in the economy. “If the company had been a bank or other financial institution, the general public would certainly think twice before investing in its shares. But due to its track record, the share issue will definitely be fully subscribed,” added Bhattarai. “Because of the company’s dividend distributing trend in past years, investors will not hesitate to borrow money to invest in its IPO.”
Currently, the earning per share of CHCL stands at Rs 107 per share while it has been providing up to 60 percent cash dividend annually.
NCM Merchant Banking and Citizens Investment Trust have been appointed issue managers to the IPO.
Source: Kantipur
The initial public offering (IPO) of Chilime Hydro Power Company Limited (CHCL) has finally materialized after being stalled for almost two years.
CHCL has announced that 1.34 million ordinary shares worth Rs 548.83 million will be opened to the general public from May 31. The shares are being offered at a premium of Rs 408.36 per share over the face value of Rs 100 per share. CHCL has become the first hydropower company to issue shares at a premium.
CHCL had decided to go for an IPO in 2009, but the plan stalled when locals from Rasuwa filed a case at the Supreme Court demanding that the company allocate 10 percent of the shares to them. In response to the public interest litigation, the Supreme Court issued a stay order halting the proposed IPO.
In 2009, the Securities Board of Nepal (Sebon) had granted permission to the company to issue 2.34 million shares at a premium to increase its share capital to Rs 960 million. The deadlock was resolved after Sebon amended the Securities Registration and Issuance Regulation 2065 allowing Rasuwa locals to get 10 percent of the share issue. Earlier, Sebon had approved allocating 5 percent of the shares to the locals.
About six months ago, the hydropower company had offered 960,000 ordinary shares to the locals of Rasuwa where the 22.1 MW project is located. Out of the total 960,000 shares earmarked for Rasuwa locals, 636,000 units were awarded to the inhabitants of three project-affected VDCs—Goljung, Chilime and Syafru—while the remaining 624,000 units were allocated to locals of 15 other VDCs. Locals of the project-affected VDCs got shares at the face value of Rs 100 per unit.
Rabindra Bhattarai, a stock analyst, said that CHCL’s IPO would be fully subscribed despite a protracted liquidity crisis in the economy. “If the company had been a bank or other financial institution, the general public would certainly think twice before investing in its shares. But due to its track record, the share issue will definitely be fully subscribed,” added Bhattarai. “Because of the company’s dividend distributing trend in past years, investors will not hesitate to borrow money to invest in its IPO.”
Currently, the earning per share of CHCL stands at Rs 107 per share while it has been providing up to 60 percent cash dividend annually.
NCM Merchant Banking and Citizens Investment Trust have been appointed issue managers to the IPO.
Source: Kantipur
