Solu Hydropower IPO opens for General Public, 820,000 investors to receive shares

KATHMANDU: Solu Hydropower Company Limited has opened its initial public offering (IPO) for the general public from today, following the completion of share allotment to project-affected locals and Nepalis working abroad in the first phase.

The company is issuing shares worth 20 percent of its issued capital of Rs 10 billion. This translates into Rs 2 billion equivalent to 20 million shares being allocated to the public category. After allotments to project-affected communities, foreign employment-based applicants, and mutual funds, a total of 8.2 million shares have been reserved for the general public.

Based on the minimum application size of 10 shares, the current public issue is expected to accommodate around 820,000 applicants.

Retail investors can apply for a minimum of 10 shares and a maximum of 100,000 shares. The application window will remain open until Magh 4. Applications must be submitted through the Meroshare online system. Nabil Investment Banking and Himalayan Capital have been appointed as the issue and sales managers.

Solu Hydropower has developed the Lower Solu Hydropower Project in Solukhumbu district. The project is an 82-megawatt run-of-river hydropower plant, which the company says has already been completed and has entered commercial operation.

Including interest during construction, the total project cost stands at Rs 16.30 billion. The per-megawatt cost is estimated at Rs 198.8 million, which is within the range of similar hydropower projects developed in Nepal’s mountainous terrain.

The company has reported that power generation has already commenced on a commercial basis. As of the end of fiscal year 2080/81, Solu Hydropower’s earnings per share (EPS) stood at Rs 0.23. The company’s net worth per share has been reported at Rs 100.

According to the prospectus, the company has accumulated reserves of Rs 15.8 million. The estimated payback period for equity investment from project cash flows is 6.78 years, based on current projections.

Solu Hydropower aims to raise Rs 8 billion through equity, while its outstanding loan liability currently stands at Rs 10.60 billion. The project is largely financed through bank loans, a common financing structure for large hydropower developments in Nepal.

The company has received a BB+ credit rating from ICRA Nepal. This rating indicates a moderate level of credit risk and average capacity to meet financial obligations, reflecting the leveraged nature of hydropower projects during their early operational years.

The power generation license for the Lower Solu Hydropower Project remains valid until Chaitra 4, 2106 BS, providing a long operational horizon for electricity generation and revenue recovery.

Major promoter shareholders of the company include Govindlal Sanghavi, Ramchandra Sanghavi, Birendra Kumar Sanghavi, Aditya Sanghavi, Anuj Agrawal, Vishal Agrawal, Subhash Chandra Sanghavi, Harshabardhan Sanghavi, and Nikunj Agrawal, among others.

The IPO is one of the larger public issues in Nepal’s hydropower sector in the current fiscal year, reflecting continued investor interest in energy projects despite rising scrutiny over project costs, debt levels, and long-term returns.