IPO issue of Shiva Shree Hydropower Limited has been interrupted due to confusion and disagreement between the company and the underwriters of the issue.
Shiva Shree’s IPO issue for the public was only subscribed by 27% due to which the underwriters were expected to sweep the remainder of the issue in the predetermined ratio. As per the agreements that took place in the month of Baisakh, Muktinath Capital Limited (former Vibor Capital) and CBIL Capital were appointed as the underwriters to the issue.
However, no information was provided to the underwriters regarding the losses incurred by the company due to the floods in the month of Asadh as per the officials at CBIL Capital, which violates the Civil Code, 2074.
The officials added that, initially the cost of the project was Rs.16.50 Crore which eventually increased to Rs.22.50 Crore. As per the regulations, if the cost of the project increases by more than 20%, the agreement with underwriters is to be renewed. But the company didn’t inform the capital regarding the increase in the cost of the project.
The letter informing the company regarding the inability of the underwriters to purchase the remainder of shares reached SEBON. Since, the underwriters didn’t point to the problem when the prospectus was published seven days prior to the opening of the issue, SEBON has asked the underwriters to give further clarification in the matter.