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Company Profile:
Madhya Bhotekoshi Jalavidhyut Company Limited (MBJCL) is a public limited company incorporated on July 29, 2010. The company is promoted by Nepal Electricity Authority (NEA) (A GoN Corporation) and Chilime Hydropower Company Limited (CHCL, 51% subsidiary of NEA) for setting up 102 MW run-of-river, Middle Bhotekoshi Hydroelectric Project in the Shindhupalchowk district of Nepal. The project is constructed under BOOT (Build, Own, Operate, and Transfer) mechanism. As per the Generation License, from GoN- Ministry of Energy, dated December 03, 2013, the project shall be handed, on whatever conditions the project is, to the Government of Nepal after the expiry of the generation License, which is 35 years.
About the Issue:
Madhya Bhotekoshi Jalavidhyut Company Limited is issuing 9,000,000 units of ordinary shares worth Rs. 90 crores to the general public from Ashwin-20, 2078. The early closing date of this IPO issue is on Ashwin-25, 2078. If this issue is not fully subscribed till Ashwin-25, 2078 then the issue will be extended up to Kartik-03, 2078.
The company is set to issue a total of 9,000,000 units of shares i.e., 15% of the total issued capital from Ashwin-20, 2078. From the total of 9,000,000 units, 450,000 units i.e., 5% are for mutual funds. 4% of the total units i.e., 360,000 units are for the employee of the company, and the remaining 8,190,000 units are for the general public.
Applications can be placed for a minimum of 10 units to a maximum of 10,000 units.
Global IME Capital Limited has been appointed as the issue manager.
| Particulars | Percentage | Units | Amount |
|---|---|---|---|
| Total Capital | 100% | 60,000,000 | 6,000,000,000 |
| Total Issue | 15% | 9,000,000 | 900,000,000 |
| Employees | 4% of IPO Units | 360,000 | 36,000,000 |
| Mutual Fund | 5% of IPO Units | 450,000 | 45,000,000 |
| General Public | 91% of IPO Units | 8,190,000 | 819,000,000 |
| Issue Manager | Global IME Capital Limited | ||
| Issue Open Date | Ashwin 20, 2078 | ||
| Issue Closing Date (earliest) | Ashwin 25, 2078 | ||
| Issue Closing Date (Late) | Kartik 03, 2078 | ||
| Minimum Application | 10 | ||
| Maximum Application | 10,000 |
CARE Rating:
CARE Rating Nepal has assigned ‘CARE-NP IPO Grade 4+’ to the proposed Initial Public Offering (IPO) of Madhya Bhotekoshi Jalavidhyut Company Limited (MBKJCL). The grade assigned to any individual issue represents a relative assessment of the ‘fundamentals of the issuer.
Key Grading Weakness:
- Project implementation risk- delay in execution of project and cost overrun
- Decrease in project life leads to low return from the project
- Exposure to fluctuation in the foreign currency exchange rates for the unhedged contractual liabilities
- Hydrology risk associated with run-of-river projects
- Financial closure not achieved for revised project cost and exposure to volatile interest rates
- Power evacuation risk
- Exposure to regulatory risk
Key Grading Strengths:
- Strong Promoter Group and management expertise in operating hydropower projects
- Power purchase agreement with sufficient period coverage
- Moderate counterparty risk
- Fixed priced Civil & Hydromechanical, Electromechanical and Transmission Line Contracts
- Shortage of power in the country
- Government support for the power sector
Board Members:
| Board of Directors | |
|---|---|
| Name | Position |
| Mr. Hara Raj Neupane | Director |
| Mr. Lekhnath Koirala | Director |
| Mr. Dhurva Bhattarai | Director |
| Mr. Tulsi Ram Dhakal | Director |
| Mr. Subhash Kumar Mishra | Director |
| Mr. Shree Ram Raj Paudel | Director |
| Mr. Naresh Lal Shrestha | Director |
Capital Structure:
| Authorized Capital | 6,210,000,000 |
| Issued Capital | 6,000,000,000 |
| Current Paid-Up Capital | 4,500,000,000 |
| Capital after IPO Issuance | 6,000,000,000 |
Shareholding Pattern:
- Promoters Shareholders:
| Promoters Shareholders | Number of Shares | Amount | Percentage | Remarks |
|---|---|---|---|---|
| Nepal Electricity Authority | 6,000,000 | 600,000,000 | 10% | Already Issued |
| Chilime Hydropower Company Limited | 22,200,000 | 2,220,000,000 | 37% | Already Issued |
| Sindhupalchowk Hydrpower Company Limited | 600,000 | 60,000,000 | 1% | Already Issued |
| Nepal Ariniko Hydropower Company Limied | 600,000 | 60,000,000 | 1% | Already Issued |
| Sindhu Investment Company Limited | 600,000 | 60,000,000 | 1% | Already Issued |
| Sindhu Bhotekoshi Hydropower Limited | 600,000 | 60,000,000 | 1% | Already Issued |
- General Public (Inc. Employees)
| General Public | Number of Shares | Amount | Percentage | Remarks |
|---|---|---|---|---|
| Employee Provident Fund | 11,700,000 | 1,170,000,000 | 19.50% | Already Issued |
| Promoters Organization’s Employee | 2,100,000 | 210,000,000 | 3.50% | Already Issued |
| Real Creditor’s Employee (Financial Institutions) | 600,000 | 60,000,000 | 1% | Already Issued |
| Project Affected Locals | 6,000,000 | 600,000,000 | 10% | Already Issued |
| General Public | 9,000,000 | 900,000,000 | 15% | To be Issued |
Project Information:
| Name of Project | Madhya Bhotekoshi Jalavidhyut Aayojana |
| Installed Capacity | 102 MW |
| General License Signed | 8/18/2070 |
| General License Valid up to | 8/17/2105 |
| PPA signed with NEA | 14 NOV, 2011 |
| Annual Energy Generation | 542.2 GWh |
| Annual Dry Energy | 83.7 GWh |
| Annual Wet Energy | 458.5 GWh |
| Total Cost (Inc. Interest) | Rs.16,973,218,000 |
| Cost per Mega-watt (Inc. Interest) | Rs.16,640,4101 |
(NOTE: As per the company, the remaining license for the company is 27 years and 7 months)
Uses of funds:
| S. N | Particulars | Amount |
|---|---|---|
| 1 | Civil and Hydro mechanical works | 1,000,000,000 |
| 2 | Electromechanical works | 300,000,000 |
| 3 | Developmental works of transmission line | 100,000,000 |
| 4 | Other Costs | 50,000,000 |
| 5 | Project Operating costs | 50,000,000 |
| Total | 1,500,000,000 | |
(The total fund includes amount collected from local IPO and General public IPO)
Financial Highlights:
| Particulars | Actual | Estimated | ||||||
|---|---|---|---|---|---|---|---|---|
| 2073/2074 | 2074/2075 | 2075/2076 | 2076/2077 | 2077/2078* | 2077/2078 | 2078/2079 | 2079/2080 | |
| Total Paid-Up Capital (‘000) | 2,870,500.00 | 3,060,000.00 | 4,500,000.00 | 4,500,000.00 | 4,500,000.00 | 6,000,000.00 | 6,000,000.00 | 6,000,000.00 |
| Reserve & Surplus (‘000) | -111,897.00 | -127,853.00 | -197,495.00 | -252,527.00 | -275,963.00 | 47,293.00 | 951,687.00 | 2,233,098.00 |
| Debt (‘000) | 1,980,020.00 | 3,347,905.00 | 3,895,307.00 | 5,009,648.00 | 4,256,158.00 | 10,150,289.00 | 8,787,730.00 | 7,425,170.00 |
| Revenue from sale of Electricity (‘000) | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | N/A | N/A | N/A |
| Net Profit (‘0000 | -21,023.00 | -15,956.00 | -51,058.00 | -55,031.00 | -23,436.00 | 299,820.00 | 904,394.00 | 1,281,411.00 |
| Earnings per share (Rs.) | -0.73 | -0.52 | -1.13 | -1.22 | -0.52 | 5.00 | 15.07 | 21.36 |
| Net worth per share (Rs.) | 96.10 | 95.82 | 95.61 | 94.39 | 93.87 | 100.79 | 115.86 | 137.22 |
| Debt-Equity (times) | 0.72 | 1.14 | 0.91 | 1.18 | 1.01 | 1.68 | 1.26 | 0.90 |
| Return on Equity (%) | -0.76% | -0.54% | -1.19% | -1.30% | -0.55% | 4.96% | 13.01% | 15.56% |
How much to apply for?
When we observe the current scenario of Nepal’s capital market, investors have shown a high level of optimism, signaled by intense participation for the last few months. Almost all of the stocks have been trading significantly higher than they were before lockdown, regardless of the short-term fluctuations.
When we look at the current trend of public issues in the market, we see that more than 23-24 lakhs investors have been applying in recent issues. This is a huge number when compared to past data. Even if half of this number applies to the issue of Madhya Bhotekoshi Jaavidhyut Limited (MBJCL), the issue will be oversubscribed.
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