NEA poised to issue public shares worth Rs 60 billion

KATHMANDU, JANUARY 15: Nepal Electricity Authority (NEA) is planning to become a public limited company by issuing Initial Public Offerings (IPO) worth Rs 60 billion.

Under the Nepal Electricity Authority Act, 2041 B.S., the NEA plans to sell the shares to the general public apart from restructuring the financial structure of the organization.

A meeting of the Board of Directors of the NEA held on December 11 decided to restructure the government entity as a public enterprise. It also agreed to maintain the authorized capital of Rs 300 billion.

After receiving the necessary approval from the Council of Ministers (via the Ministry of Energy, Water Resources and Irrigation), the NEA is looking to issue shares at a premium price of up to 10 per cent of the proposed authorized capital. Hence, maintaining the price per share up to twice the net worth.

The Ministry of Finance (MoF) is said to have given consent to the state-run entity to go public.

The NEA has proposed to maintain the book value of its shares at around Rs 125 and add the same amount of premium to issue shares. As such, the general public looking to invest in the NEA needs to spend Rs 250 per share.

Notably, the NEA has received a ‘Double A Plus’ credit rating from ICRA Nepal. The very credit rating comes with very low credit risk and demonstrates that the issuer has a strong capacity to repay its debts.

According to the NEA, it plans to increase its capital base by leveraging every available financial instrument like ordinary shares, corporate bonds, debentures, green bonds, etc.

The authorized capital of the entity stands at Rs 125 billion and it earned profits of Rs 12.33 billion in the last fiscal year.