Panasian Power to execute private placement deal to raise Rs.400mn

Panasian Power PLC seems to be trying to exploit the prolonged power crisis in the country, as the renewable energy producer is bolstering its capital to get its ongoing and new solar projects online, as early as possible. 

In a disclosure released to the Colombo Stock Exchange, the company stated that its director board decided to issue 125 million ordinary voting shares at Rs.3.20 a share, to Emerald Sri Lanka Fund 1 Limited by way of a private placement, to raise Rs.400 million, subject to shareholder approval. 

The Panasian Power shares were trading at Rs.3.00 at the end of trading on Tuesday, before the market closed on May 1 for the International Workers’ Day.

The company said it expects to utilize the funds to part finance several ground solar power projects earmarked to be commenced this year. 

The total value of all such projects is Rs.1.3 billion, the company said. 

The hydropower major recently diversified into solar power and the company is already seeing the benefits of this strategy. 

Based on the most recent financial results, the group reported earnings of Rs.267.2 million or 54 cents a share, compared to Rs.123 million or 25 cents in earnings during the same period in the previous year. 

During the period, the group revenues were also up 86 percent year-on-year to Rs.586.5 million. 

While the top line was well anchored by the group’s mini hydropower plants in Padiyapelella and Rathganga with Rs.270 million and Rs.157 million from each, the company has also seen, albeit small, the benefits coming from its solar projects with revenues rising to Rs.2.2 million, stated Panasia Power Chairman/CEO Dr. Prathap Ramanujam.  The recent decision to call for more capital is also a signal by the company that it is not afraid to dilute the stakes of its existing shareholders to invite more long-term-oriented equity funds with a good track record, which also have the patience and inclination to invest in lucrative and futuristic areas.  

The private placement is for a 20 percent stake of Panasian Power. 

The Emerald Fund is the largest private equity fund dedicated to Sri Lanka, seeking to make capital investments in the range of US $ 2.0 million to US $ 6.0 million in equity and equity-linked securities, the disclosure made by Panasian Power stated. 

The Emerald Fund is managed by NDB Zephyr Partners Limited, a joint venture between NDB Capital Holdings Limited with a 60 percent share and Zephyr Management L.P in the United States with a 40 percent stake. 

As at December 31, 2018, Jinaasa Panadura Liyanage Dilanka and high-net-worth investor Dr. T. Senthilverl held 29.64 percent and 29.77 percent stakes, respectively in Panasian Power.