Lanka Energy Fund in Rs. 1.2 billion IPO
Lanka Energy Fund which comes under the HNB group is planning to sell 120 million shares at LKR 10 per share to raise a LKR 1.2 billion initial public offering (IPO).
Lanka Venture Fund (LVF), a publicly traded company, holds 71% stake in the company and has initiated thermal and renewable energy projects in Bangladesh, Nepal and Sri Lanka.
60% of the funds raised through the IPO will be utilised for new investment programmes, with the balance 40% used for debt settlement and aLKR 300 million “deemed disposal profit” expected to be realised in LVF’s financials.
Lanka Energy Fund has invested LKR 727 million on operating and current construction of hydro power projects generating a total of 20.5 MW of energy, with its wind power project investment totalling LKR 667 million generating 15 MW of energy, and an LKR 1,040 million total investment in Bangladesh-based thermal power projects generating 104.4MW of power.
The company’s total investment in energy generating projects is estimated at LKR 2,434 million with the breakdown being 27% investment in wind energy generation, 30% hydro power investment and a 43% investment in thermal power plants.
A 14% return on investment (ROI) was realised in the hydro power projects, 22% ROI on thermal power generation and 27% in wind projects.
By mid-2019 Lanka Energy Fund is expected to initiate a USD 3 million hydro power plant generating an estimated 10MW of power and also intends to set up a thermal power plant in Bangladesh with the capacity to generate 114MW of power.
The company also hopes to invest in a 20 MW Sri Lanka wind energy power plant, with plans to bid on Ceylon Electricity Board tendered solar power plants.
The expansion of Sri Lanka’s energy projects is a clear indicator on the benefits of entering the sector. With the country’s overall infrastructure development plans, Sri Lanka’s energy requirements are expected to see a sharp rise thereby increasing the demand for energy.
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