More hydro power companies to enter capital market

With the number of financial institutions going public waning, primary investors will see more hydropower companies entering stock market.

More hydropower firms are seeking to issue shares to public to raise capital, while the public is also taking into these shares for its lucrative returns and handsome dividends.

The capital market will soon see the initial public offerings (IPOs) of two hydro companies, while two more that have already conducted IPOs will be listed within the next few months. Likewise, a few more are preparing their prospectus for public issue. The capital market will see issues worth Rs 2.6 billion including the offering of Upper Tamakoshi Hydropower.

“Almost all financial institutions have issued shares to the public with only small development banks and microfinance companies remaining to go public,” informed spokesperson for Securities Board of Nepal (Sebon) Niraj Giri.

At present, there are 207 financial institutions licensed by Nepal Rastra Bank, while there are 171 listed financial institutions at the stock exchange. The remaining commercial bank — Century Commercial Bank — has applied for IPO approval. A large number of the remaining institutions are development banks and microfinance institutions operating in a limited number of districts, thus the size of their public offerings will also be small.

“So we will see more hydro firms issuing shares in future as most of the other service and manufacturing firms are still reluctant,” Giri added. As of fiscal year 2011-12, there were 114 hydropower projects registered at Department of Industry.

“My company is managing the issue of Ridi Hydropower which is holding IPO for locals. And we have applied for Barun Hydropower’s IPO and are working on Ankhu Khola Hydropower’s prospectus,” informed CEO of Civil Capital — merchant banker — Bhishma Raj Chalise.

“Raising capital from public issuance is desirable for companies that are planning to promote multiple projects as the money raised from an IPO can be used in running another project and they can also issue rights shares to start multiple projects,” added Chalise.

According to Securities Registration and Issuance Regulation – 2065, hydropower companies must float a minimum of 10 per cent of issued capital as shares to locals before they open their issue to general public.

Source: THT