LVL Energy Fund IPO raising Rs.1.2bn oversubscribed

The largest Initial Public Offering (IPO) on the Colombo Stock Exchange (CSE) since 2015 raising Rs. 1.2 billion for LVL Energy Fund was snapped up on the opening day.

The firm, which invests in power projects in Sri Lanka, Bangladesh and Nepal, offered 120 million shares valued at Rs.10 per share.

The IPO price was backed up by an independent valuation carried out by Capital Alliance Partners Limited using a combination of SOTP (Sum of the Parts) and PE (Price Earning) valuations.

LVL said Rs. 720 million from the IPO will be invested in three new hydro power projects; Rs. 255 million in two hydro power plants aggregating to 3.9 MW in Sri Lanka and the balance Rs. 465 million in a 10 MW hydro power plant in Nepal. 

The remaining part of the IPO proceeds amounting to Rs. 480 million will be utilized for settlement of debt which will improve the company’s borrowing capacity to finance more projects that are in the pipeline.

Projects in the pipeline include two 10 MW wind power projects in the Jaffna peninsula and one 100 MW thermal power project in Bangladesh.

The company has delivered 47 percent year-on-year growth in earnings over last five years and has been paying dividends since 2010. Lanka Ventures PLC, the parent company of the LVL Energy Fund, is a subsidiary of Acuity Partners (Private) Limited, which is a joint venture between Hatton National Bank PLC and DFCC Bank PLC.

LVL will be the island’s only listed company that has investments in thermal energy, as well as two key renewable energy sources— hydro and wind energy.
In terms of fund size and overall size of the investment portfolio, LVL Energy Fund will be the largest amongst its peers in the stock market.