Rs. 600 m Panasian Power IPO draws Rs. 4.4 b applications

The recently concluded Rs. 600 million Initial Public Offering of Panasian Power Ltd. had drawn Rs. 4.4 billion worth of applications reflecting an oversubscription of slightly over seven times.

There had been 15,574 applications in total with bulk (15,529) requesting for 300.1 million shares worth Rs. 900.54 million with payments made by bank draft and cheques.

The IPO also drew 45 large applicants with payments by bank guarantee requesting for 1.168 billion shares worth Rs. 3.5 billion.

Via the IPO, Panasian Power (PAP) offered 200 million shares at Rs. 3 each. The IPO proceeds will be utilised to settle the payments due to PAP parent Power Hub International Sdn. Bhd (PHI).

PAP is a company involved in hydro power development activities. It is a BOI approved company and 100% owned by PHI. The PHI is a subsidiary of Majulia SDN BHD, a diversified Malaysian company engages in different business segments including power generation. PHI undertakes mini hydro power development projects in the Asian region.

It started its venture in Sri Lankan Mini hydropower sector with the acquiring of Pan Asian Power Limited and Manelwala Hydro Power (Pvt) Ltd (MHPL) in August 2009. In September 2010, PAP acquired 100% ownership of MHPL.

Panasian Power Limited owns and operates a Mini hydropower plant (MHP) in Ratnapura with a capacity of 2 Mw. The Company generates revenue mainly from selling of electricity to the national grid based on the tariffs received by the Ceylon Electricity Board (CEB).

CEB has entered into a Standardised Power Purchase Agreement (SPPA) with the company to purchase all the energy output of its Mini Hydro Plant for a period of 15 years which is valid until July 2019.

Apart from this, PAP enjoys a 15 year tax holiday granted by the Department of Inland Revenue up to FY 2017/18. Manelwala Hydro Power (Pvt) Ltd operates a 2.4 Mw MHP in Nuwara Eliya District. It also benefits from the SPPA with the CEB for 15 years commencing from June 2008. Being a BOI registered company, MHPL enjoys a tax holiday for a period of 5 years up to FY 2013/2014.

The Company intends to enhance its present power generation capacity to 15 Mw over the next five years. As the first step towards this, it has already received the confirmation from CEB to increase its present power generation capacity from 2 Mw to 3 Mw and expects to commence additional generation by December 2011.

Apart from this, PAP is currently in negotiations to acquire another power plant, which has signed SPPA for 6.5 Mw.