A lot of talk regarding the IPO of Upper Tamakoshi but what about the ones that are already issued; certificates state tradeable from Jestha 28 but haven’t even begun dematerialization

Upper Tamakoshi Hydropower Limited has paid-up capital of Rs 10.59 billion and has the capacity for 456 MW. It is the largest capacity hydropower project in the country and it has 8.4 km longest tunnel which has been constructed so far. The capital structure of the company is distributed as following:

51% - Promoter shares

            41% - NEA (Nepal Electricity Authority)

            6% - NTC (Nepal Telecom)

            2% - CIT (Citizens Investment Trust)

            2% - RBS (Rastriya Beema Sanstha)

49% - Ordinary Shares

            24% - Promoter companies’ staff and EPF Depositors

                        17.28% - EPF Depositors

                        3.84% - NEA staffs

                        0.864% - NTC staffs

                        1.44% - EPF staffs

                        0.288% - RBS staffs

                        0.288% - CIT staffs

            25% - Still to be issued

                        10% - Project affected locals

                        15% - General public

The latest news concerning Upper Tamakoshi has been hovering mainly around the topic of 25% IPO to be issued for locals and general public. The continuous protests of the locals, low grading by ICRA and late approval from SEBON can be one of the few reasons. However in this hue and cry, people have been overlooking the issues regarding the 24% shares that have been already issued to promoter companies’ staffs and EPF depositors. The physical certificates clearly states that the share will be tradeable from Jestha 28, 2075 as you can see in the image below, but no significant development has come on the surface.

Upon talk with Mr. Dev Prakash Gupta, CEO of CDS and Clearing, sharesansar has come to know that no agreement has been signed as of yet. Without an agreement with CDS and Clearing, the physical shares won’t be dematerialized. Once the signing is done the dematerialization process is bound to take some time.

The other thing that we can’t oversee is the fact that, unless and until 10% of the shares are dematerialized it can’t get listed in NEPSE. So after dematerialization process, Upper Tamakoshi also need to sign an agreement with NEPSE to get listed. So from today to Jestha 28, we have approximately 1 month and given the way things work in Nepal, it is fair to conclude that Upper Tamakoshi’s trading might not start from the promised date.

Upper Tamakoshi has been facing one after other complication from the beginning. The launch date itself has been shifting multiple times and based on latest developments the launch will be on December, 2018 if everything goes as planned. The estimated cost of the project was Rs 35.39 arba, however based on latest information it has increased to Rs. 49 arba.

However, upon conversation with Dr. Ganesh Neupane, spokesperson of Upper Tamakoshi, he clarified that the process hasn’t started because they are waiting to issue IPO for the locals and general public. Once the 49% ordinary share is fully floated and subscribed, they will be listed together. The IPO for the remaining 25% IPO is still under SEBON’s scrutiny and is yet to be approved. The spokesperson regarding the same reassured that, if the IPO for locals and general public takes longer than 2 weeks for approval, then they will send a request to dematerialize and list the previously issued shares before the remaining 25%.