LTL Holdings announces largest IPO on CSE

From left: NDB Investment Bank – Darshan Perera, DCEO –  Ravindra Pitigalage,  CEO – Nuhuman Marikkar, Chairman – Nalinda Illangakoon,  Founder – U.D. Jayawardana, Deputy CEO – U. Gamini Sarath, CT CLSA – Zakir Mohomedally
Pic by Kithsiri de Mel

By Nishel Fernando 

Sri Lanka’s leading fully integrated power sector conglomerate, LTL Holdings Ltd announced the largest IPO to date on Colombo Stock Exchange (CSE), with plans to raise up to Rs.20 billion by offering 22.3 percent stake in the company. 

The IPO is an offer for subscription of up to 1.38 billion new ordinary voting shares at an issue price of Rs.14.50 per share via an initial issue of Rs.16 billion, with a greenshoe option to increase the total to Rs.20 billion through the IPO. 

The LTL has already secured commitments from a few strategic investors covering 50 percent of the total issue. The IPO is scheduled to be opened on 10 September 2024 and application for the subscription of shares is now accepted. 

According to NDB Investment Bank Limited Vice President Savinda Fernando, the IPO is attractively priced at Rs.14.50 per share, which is a 33 percent upside to LTL’s valuation of Rs. 93 billion (Rs. 19.37 per share). 
LTL operates across multiple sectors, including power generation, engineering services for power plants as an EPC (Engineering, Procurement and Construction) and O&M (Operations and Maintenance) contractor, manufacturing of power distribution equipment, and heavy engineering. With a strong focus on cleaner energy investments, the IPO represents an important milestone in the company’s growth strategy. LTL is set to embark on new ventures in clean energy while reinforcing its position as a leading player in Sri Lanka’s energy sector.
With 894 MW of existing power generation capacity in Sri Lanka, Bangladesh and Nepal and over 450 MW as secured pipeline projects, LTL is on track to become the first Independent Power Producer (IPP) in Sri Lanka to have an installed capacity of over 1,000 MW, positioning the company as the largest listed IPP on the CSE.
In Sri Lanka, LTL’s power plants accounted for 14 percent of installed capacity and 7.5 percent of all consumed electricity last year, according to LTL Holdings Deputy Chief Executive Officer and Executive Director Ravindra Kumar Pitigalage.

With foreign currency-linked revenue accounting for 70 percent of the Group’s revenue, he opined that LTL Holdings is good enough to be listed even on foreign stock exchanges such as Singapore Stock Exchange.
Meanwhile, LTL Holdings Ltd, Chief Executive Officer and Executive Director Mohamed Jalaldeen Mohamed Nuhuman Marikkar shared that Rs.13.5 billion of the IPO proceeds would be utilised to part finance the equity investment towards the construction of a 350 MW combined cycle power plant in Kerawalapitiya (Sahasdhanavi Ltd), which would be the second power plant to operate on LNG in Sri Lanka and Rs. 6 billion is to be allocated towards investing in a 50 percent equity stake in the 100 MW Siyambalanduwa Solar Power Project (Rividhanavi (Pvt) Ltd).

At present, LTL has two power plants with the required technology to operate on LNG, with an installed capacity of 650 MW which includes 300 MW Yugadhanavi power plant and 350 MW Sobadhanavi power plant.  

In terms of expanding the renewable energy portfolio in international markets, LTL has submitted a direct proposal to Bangladesh Power Development Board (BPDB) to develop a 100 MW solar power plant in Bangladesh, which is currently at an initial stage of evaluation. In addition, the company has been awarded a project to develop two solar power plants with capacities of 3.9 MW and 4.1 MW, respectively, in India. 

LTL recorded Rs. 59.8 billion Consolidated Revenue which translated to a Profit after Tax of Rs. 5.8 billion for the latest financial year ended March 2024, where 70 percent revenue was foreign currency-linked. 

Total Group Assets and Total Group Equity of LTL stood at Rs. 133.6 billion and Rs. 74.4 billion, respectively as at 31st March 2024. LTL has achieved a 5-year average profit after tax margin (PAT margin) of 35 percent and 5- year average return on equity (ROE) of 27 percent during FY2020 to FY2024. 

The company’s financial performance is expected to further increase with the commissioning of the 350MW Sobadhanavi power plant in Kerawalapitiya in upcoming FYs.

In terms of dividend, LTL officials shared intention to maintain an average dividend yield of 8 – 10 percent for the 5-year period from FY25E – FY29E.

LTL’s largest shareholder is the Ceylon Electricity Board (CEB) holding 35 percent stake, followed by West Coast Power (a state linked entity) with 28 percent, and the balance 37 percent is held by its employees via 2 investment companies. Subsequent to IPO, CEB’s stake is set to come down to 27 percent, followed by 21.7 percent by West Coast Power (Private) Limited and 35 percent by its employees via 2 investment companies.