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Madhya Bhotekoshi Company Limited; IPO Opens From Toda

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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