Sanjen Jalavidhyut Company Limited (SJCL) and Rasuwagadhi Hydropower Company Limited (RHCL) are floating initial public offerings worth above Rs 2.5 billion in the first phase.
The two hydropower companies owned by the government through Nepal Electricity Authority (NEA) are going public to mobilize capital from the public.
In the first phase, these two companies plan to offer their primary shares to the depositors and staff of promoter companies as well as lending institutions. The primary shares to the general public will be issued later on, according to the officials of these companies.
According to the RHCL’s chief Madhav Koirala, the company is floating primary shares worth a total of Rs 1.64 billion in the first phase as part of the public offering. He said that 19.5 percent of its shares (worth Rs 1.33 billion) have been allocated to the depositors of Employees’ Provident Fund, 3.5 percent (worth Rs 239.47 million) to the employees of the company’s promoter institutions like Nepal Electricity Authority (NEA) and Chilime Hydropower Company Ltd and 1 percent (worth Rs 68.42 million) to the employees of lending institution (Employees Provident Fund) in the first phase.
The general public along with locals of project-affected areas will, however, receive a total of 15 percent of the company’s shares in the next phase, according to Koirala.
The primary shares in the first phase will be up for sale beginning from February 23 and will close on March 14. Application for the primary shares for employees of promoter institution and lending institution is scheduled to open from March 19 till March 27.
Similarly, SJCL also plans to float 24 percent of its primary shares worth Rs 876 million to the depositors of EPF and employees of promoter companies and lending institution in the first phase. According to Kiran Kumar Shrestha, CEO of SJCL, depositors of EPF will be able to subscribe shares worth Rs 711.7 million between February 23 and March 30. Similarly, share applications for employees of promoter institutions worth Rs 127.75 million will open and close on the same date. For the employees of lending institution (EPF), primary shares worth Rs 36.5 million will be on grabs from March 19 till March 27.
For the locals of project-affected areas and general public, the company plans to float 25 percent of its shares in the next phase, said Shrestha.
The IPO will be floated through the Centralized Application for ASBA-based Issuance (C-ASBA). The new system, which is an upgraded version of the Applications Supported by Blocked Amount (ASBA) system, allows investors to apply primary shares through a uniform process at all ASBA members which is operated in a centralized way by the CDSCL.
The capital market is now gearing up for the implementation of C-ASBA once all public issues are made mandatory to use ASBA. Under the system, investors’ money equivalent to the subscription of initial public offering (IPO) or follow-on public offer (FPO) gets blocked until share allotments are made. Respective bank and financial institutions (BFIs) will deduct funds from the applicant’s bank account only after share allotments are made and the remaining fund is freed.