Upper Tamakoshi hydro applies to Sebon for Rs 5.18b IPO

HAVING completed almost 50 percent of the construction work, the Upper Tamakoshi Hydropower Project Limited (UTHPL) is now gearing up for an initial public offering (IPO). Worth Rs 5.18 billion, the IPO will be the country’s largest so far. The UTHPL last week formally applied to the Securities Board of Nepal (Sebon) for the IPO and has appointed Citizen Investment Trust (CIT) as the issue manager. UTHPL acting chief Bigyan Shrestha confirmed the development. The Dolakha-based 456-MW project has a paid-up capital of Rs 10.59 billion, of which 49 percent will be held by ordinary shareholders including the general public, Dolakha locals, and employees of lenders and companies having stake in the project. CIT Chief Rishi Ram Gautam said they will float UTHPL’s public shares in three phases. In the first phase, shares will be issued for the members and staffers of the Employees’ Provident Fund (EPF), and employees of UTPHL, Nepal Electricity Authority (NEA), Nepal Telecom (NT), Citizen Investment Trust (CIT) and Rastriya Beema Sansthan (RBS). They have been allocated a 24 percent share in the project. The EPF is the largest lender to the project. In the second phase, a 10 percent share will be issued to the people of Dolakha where the project is located. “And in the last phase, shares for the general public will be issued,” said Gautam. “The general public will get a 15 percent share in the company.” Sebon Spokesperson Niraj Giri said the stock regulator is currently reviewing the UTPHL’s proposal. “Once the revision is completed, it will be forwarded to the Security Registration and Issue Approval Working Committee for endorsement,” he said. According to Giri, UTPHL has proposed to launch the second phase of the IPO right after the first phase is completed. “But the project will issue shares for the general public after reviewing response in the second phase IPO,” added Giri. A commanding stake of 51 percent in the UTHPL is held by four public entities - NEA (41 percent), NT (6 percent), CIT (2 percent) and RBS (2 percent). Officials said the project has already received Rs 5.10 billion from institutional shareholders. NEA and other lenders have pledged a combined Rs 22 billion, while the Nepal government will infuse Rs 11.08 billion in the project whose estimated cost is at Rs 35.29 billion. The EPF, CIT and RBS are lending Rs 10 billion, Rs 2 billion and Rs 2 billion, respectively. The project is expected to be completed by the end of fiscal year 2014-15. As of the first half of the current fiscal year, around 50 percent work on the project has been completed.