Eight times oversubscription for Rs. 3.2 b Windforce IPO

• Biggest offering in nine years draws nearly 1,700 applications requesting for shares worth nearly Rs. 26 b as per preliminary figures

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. 

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.

Daily FT learns 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 offered 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 officially opened on 24 March and was closed same day. It was available for subscription since 2 March. Brokers to the issue were 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 will likely take place tomorrow. 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 based in Sri Lanka while the rest are spread across Pakistan (31.2%), Uganda and Ukraine.

In terms of energy, 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 is 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 will be utilised to construct a15MW Wind Plant in Mannar, Rs. 1.4 billion will be utilised 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 posted revenues worth Rs. 3.5 billion, up by 24% from a year earlier and gross profit rose 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 grew 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.