Things to Know Before Applying for IPO of Upper Solu Hydro Electric (USHEC), IPO for Locals Opens from Today
Thu, May 5, 2022 4:58 AM on IPO/FPO News, Company Analysis, Latest,
Company Profile:
Upper Solu Hydro Electric Company Limited (USHEC) was founded on May 28, 2010 as a private limited corporation, but on April 14, 2016, it was transformed to a public limited company to allow for public participation. The company is operating a 23.5MW Solu HEP in Solukhumbu district, Province 1 of Nepal. The project is a run-of-the-river (R-o-R) design with a 40% possibility of exceeding the target (Q40). The project, which was created at a total cost of NPR 5,000 million with a debt-to-equity ratio of 75.50 : 24.50, began operations on March 23, 2020. The 23.5MW Solu HEP project is one of the Super-Six projects that the Nepalese Department of Electricity Development (DoED) considered at first.
About the issue:
Upper Solu Hydro Electric Company Limited (USHEC) will be issuing its IPO to the project-affected locals of Solukhumbu districts' (Dudhkunda Municipality) from 22nd Baisakh and close on 5th Jestha, 2079. If unsubscribed, the issue can be extended up to Jestha 20, 2079.
A total of 13,50,000 shares will be issued at a par value of Rs. 100 per share. The interested locals can place their applications for a minimum of 10 units and a maximum of 1,00,000 units.
NMB Capital has been appointed as the issue manager for the IPO issuance.
After the issuance of 13,50,000 units worth Rs 13.5 crore IPO shares to the project affected locals i.e 10% of total capital and 19,57,500 units worth Rs 19.57 crore IPO shares to the general public i.e 14.50% of total capital, which will together raise its paid-up capital to Rs. 1.35 Arba.
| Upper Solu Hydro Electric Company Limited | |||
|---|---|---|---|
| Particulars | Percentage | Units | Amount |
| Total Capital | 100% | 1,35,00,000 | 1,35,00,00,000 |
| Total Issue (Project affected area) | 10% | 13,50,000 | 13,50,00,000 |
| Issue Manager | NMB Capital Limited | ||
| Issue Open Date | Baisakh 22, 2079 | ||
| Issue Closing Date (earliest) | Jestha 5, 2079 | ||
| Issue Closing Date (Late) | Jestha 20, 2079 | ||
| Minimum Application | 10 | ||
| Maximum Application | 100,000 | ||
Capital Structure
| Authorized Capital | 1,50,00,00,000 |
| Issued Capital | 1,35,00,00,000 |
| Current Paid-Up Capital | 1,01,92,50,000 |
| Capital after IPO Issuance to Locals and General Public | 1,35,00,00,000 |
Shareholding Structure
| Number of Shares | Amount | Percentage | Remarks | |
|---|---|---|---|---|
| Promoters Shareholders | 1,01,90,500 | 1,01,92,50,000 | 75.50% | Already Issued |
| Project-affected Locals | 13,50,000 | 13,50,00,000 | 10% | To be Issued |
| General Public | 19,57,500 | 19,57,50,000 | 14.50% | To be Issued |
Board of Directors
| Board of Directors | |
|---|---|
| Name | Position |
| Mr. Dinesh Lal Shrestha | Founder |
| Mr. Suresh Lal Shrestha | Founder |
| Mr. Prabin Lal Shrestha | Designer |
| Mr. Shekhar Rana | SEO |
Project Information:
| Name of Project | Solu Jalvidhyut Aayojana |
| Type of Project | Run-of-River |
| Installed Capacity | 23.5 MW |
| Electricity Generation License received | Chaitra 4, 2070 |
| Generation Valid Date | Chaitra 3, 2105 |
| RCOD | Falgun 07, 2078 |
| Total Cost in Rs | 5,00,00,00,000 |
| Cost per Megawatt in Rs. | 21,27,35,957.44 |
Financial Statement:
| Financial Highlights | |||||||
|---|---|---|---|---|---|---|---|
| Particulars | Actual | Estimated | |||||
| 2075/2076 | 2076/2077 | 2077/2078 | 2078 (Q2) | 2078/2079 | 2079/2080 | 2080/2081 | |
| Total Paid-Up Capital ('000) | 636,260.00 | 1,019,250.00 | 1,019,250.00 | 1,019,250.00 | 1,350,000.00 | 1,350,000.00 | 1,350,000.00 |
| Reserve & Surplus ('000) | -4571 | 40,326.00 | 83,057.00 | 135,089.00 | 177,856.00 | 274,789.00 | 414,130.00 |
| Debt ('000) | 2,880,139.00 | 3,266,931.00 | 3,546,001.00 | 3,608,613.00 | 3,546,001.00 | 3,306,001.00 | 3,006,001.00 |
| Revenue ('000) | - | 79,072.00 | 294,661.00 | 278,812.00 | 427,529.00 | 708,120.00 | 729,308.00 |
| Interest Expenses ('000) | - | 2,185.00 | 186,892.00 | 8,964.00 | 169,365.00 | 366,643.00 | 342,835.00 |
| Net Profit ('0000 | -3212 | 50,148.00 | 42,591.00 | 51,455.00 | 94,221.00 | 96,932.00 | 139,341.00 |
| Earnings per share (Rs.) | -0.37 | 4.73 | 4.21 | 5.05 | 6.98 | 7.18 | 10.32 |
| Net worth per share (Rs.) | 98.83 | 104 | 108.21 | 113.25 | 113.17 | 120.35 | 130.68 |
| Debt-Equity (times) | 4.56 | 3.21 | 3.48 | 3.54 | 2.63 | 2.45 | 2.23 |
| Return on Equity (%) | -0.38 | 4.55 | 3.89 | 4.46 | 6.17 | 5.97 | 7.9 |
ICRA Rating:
ICRA Nepal has reaffirmed an issuer rating of [ICRANP-IR] BB+ (pronounced ICRA NP issuer rating double B plus) to Upper Solu Hydro Electric Company Limited (USHEC or the company). Issuers with this rating are considered to have moderate risk of default regarding timely servicing of financial obligations.
Key Strengths:
- Experienced promoters/ management team.
- Lower evacuation risk.
- Eligible for higher penalty being one of the super-six project
- Low tariff and off-take risks amid already signed long-term PPA at predetermined tariffs and escalations.
Key Challenges:
- High project cost, high debt financing and expectation of moderate coverage indicators.
- Weak operational performance so far and limited track record of full-fledged performance.
- High hydrology risk due to lack of deemed generation clause in the PPA.
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