Sunday, December 31, 2017

Sebon asks hydel firms to issue IPO only after declaring financial details

The capital market regulator has directed the hydropower companies to provide information about their financial status before issuing their initial public offering (IPO) to help people make informed decision.
Securities Board of Nepal (Sebon) directive comes at a time when the hydropower companies are preparing to issue their public offerings. "Some 16 hydropower companies are planning to issue IPOs," according ot the regulator. "The trend of even the hydropower companies which are not financially sound issuing their IPOs has increased by keeping the people in the dark." 
The regulator has also instructed – also to make the IPO issuance process systematised, transparent and simple – the companies to give information regarding the duration the investments made in the projects will start giving returns and the bases. It has asked the hydropower companies to provide clear information regarding the per megawatt (MW) cost, the remaining term of the power production license and the period the investment would be refunded, according to Sebon director Niraj Giri. "They also have to disclose information on net assets per share and the per share income as per their audited financial statement," he said, adding that the companies which are into operation for three years have to give the complete details for all the previous years, whereas the companies not completing three years operation also have to provide details of the period they have been into operation. "Te hydropower companies also have to give clear information about their audit reports."
The hydropower companies have to issue 10 per cent shares to the project affected locals and 15 per cent shares to the general public as it is mandatory.
The Independent Power Producers' Association of Nepal (IPPAN) has welcomed the regulator's move.
The banks and financial institutions (BFIs) dominated share market has currently 17 hydropower companies that are registered with the Nepal Stock Exchange (Nepse). But only a few of them are in profit, according to the first quarterly report. 

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