LVL Energy Fund Limited (LVLEFL), an energy company and a subsidiary of Lanka Ventures, announced a Rs. 1.2 billion initial public offering (IPO) to fund strategic expansion and growth in the renewable energy sector.
This IPO will be the largest listing in the country since the beginning of 2015. With 120 million shares being made available at Rs. 10 per share, the IPO will aim at raising Rs. 1.2 billion. The IPO price is backed by an independent valuation carried out by Capital Alliance Partners Limited using a combination of SOTP (Some Of The Parts) and PE (Price Earning) valuations.
As per the valuation, the independent valuer had arrived at a price of Rs. 13.18 per share but based on a sensitivity analysis has recommended a price range from Rs. 10.60 to Rs. 16.62 per share.
Based on Rs. 13.18 value, the offer price of Rs. 10 per share is at 24 percent discount which augurs well for active secondary market trading following the IPO.
“We are pleased to announce the IPO which is expected to raise funds to fuel company growth. Sixty percent of the proceeds of the IPO, which amounts to Rs 720 million will be utilized for three hydro power projects, Rs 255 million in two hydro power plants aggregating to 3.9 MW in Sri Lanka and the balance Rs 465 million in a 10 MW hydro plant power plant in Nepal,” LVL Energy Fund Limited CEO Sumith Arangala said.
The remaining proceeds of the IPO, amounting to Rs. 480 million will be utilized for settlement of debts which will improve the company’s borrowing capacity to finance more projects that are in the pipeline, he said.
The projects in the pipeline include two 10 MW wind power projects in Jaffna Peninsula and a 100 MW thermal power project in Bangladesh. The company is currently looking at potential investment opportunities in the solar power segment.
In addition to its presence in Sri Lanka, Bangladesh and Nepal, the company is eyeing investment opportunities in East Africa as well.
Lanka Ventures PLC, the parent company of LVLEFL is a subsidiary of Acuity Partners (Private) Limited, a joint venture between Hatton National Bank and DFCC, two of the country’s most respected financial institutions.
LVLEFL will be the country’s only listed company that has investments in thermal energy as well as two key renewable energy sources, hydro and wind energy.