Windforce Ltd.’s Initial Public Offering sees an oversubscription of eight times
Renewable energy giant Windforce Ltd.’s Initial Public Offering (IPO) worth Rs. 3.2 billion, biggest in nine years, has seen an oversubscription of eight times triggering a demand worth nearly Rs. 26 billion as per preliminary figures, according to local media reports.
The company hasn’t formally revealed the final oversubscription amount but the capital market was abuzz about the success of the IPO over the weekend, the Daily FT has reported.
The Daily FT report states that it had learnt there had been nearly 1,700 applications requesting for shares worth Rs. 25.7 billion.
Styling itself as Sri Lanka’s biggest and fastest growing producer of renewable energy, Windforce IPO has offered a 15% stake or 202,615,341 new ordinary voting shares of par value of Rs. 10 at Rs. 16 each. The previous biggest IPO in recent years was that of People’s Leasing (PLC) worth Rs. 7 billion in 2012.
The issue had officially opened on 24 March and was closed the same day.
It was available for subscription since 2 March and brokers to the issue had been CT CLSA Holdings and Capital Alliance whilst several other brokers have recommended the IPO to investors given the company’s performance and future outlook as well as the growing demand for and reliance on renewable energy locally and globally.
Allocation of shares was likely to take place early this week and the basis of allotment proposed was if IPO is oversubscribed, 30% to retail individual investors, 10% to unit trusts, 7.5% to Group employees and directors and 52.5% for non-retail investors.
Windforce currently operates 27 power plants with a total installed capacity of 218MW. Bulk (55.4%) of this is reportedly based in Sri Lanka while the rest are spread across Pakistan (31.2%), Uganda and Ukraine.
In terms of energy, the company has seven wind plants (69.2 MW), 10 solar power plants (123 MW) and 10 mini hydro plants (26.4 MW).
Windforce’s share structure primarily consisted of leading local family businesses – including Akbar Brothers Group (post IPO stake of 33%), Hirdaramani (20.7%), Debug Investments (12.1%) and MAS Holdings (3.3%).
Of the funds raised, Rs. 927 million is to be utilized to construct a 15 MW Wind Plant in Mannar, Rs. 1.4 billion is to be utilized to construct a 30 MW solar plant in Senegal and Rs. 932 million will be kept as funds retained for future investments.
In FY20, the Company had posted revenues worth Rs. 3.5 billion, up by 24% from a year earlier and gross profit had risen by 18.5% to Rs. 2.3 billion and operating profit by 17.5% to Rs. 2.04 billion. Pre-tax profit was Rs.2.35 billion, up 37.5% and after tax profit amounted to Rs. 1.89 billion, up by 28%.
For the nine months of FY21, revenue had grown by 36% to Rs. 3.7 billion and pre-tax profit by 7% to Rs. 2.1 billion and post-tax figure was Rs. 1.97 billion up by 5.5% from a year earlier.
Sri Lanka’s renewable energy generation sector is a fast growing sector that has opened up many business opportunities. Sri Lankan authorities are keen on expanding sustainable renewable energy generation in the country as part of its programme to address the growing demand for power. All these have resulted in the increase in value of renewable energy generation companies. Sri Lanka is also fast becoming a business hub in the South Asian region given its geographical positioning in the Indian Ocean and the many trade agreements as well as the trade concessions enjoyed by the country. Foreign businesses/investors could explore business/investment opportunities in Sri Lanka’s renewable energy generation sector.
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