LVL Energy Fund plans Rs. 1.2 b IPO

• Application being considered, 60% of funds to be utilised for investment and remainder for settling debt 

LVL Energy Fund Ltd., which has thermal and renewable energy projects in South Asia including Sri Lanka, Bangladesh and Nepal, is planning an Rs. 1.2 billion Initial Public Offering (IPO), the company said in its latest Annual Report.

The firm, which is 71% owned by Lanka Venture Fund (LVF), wants to sell 120 million shares at Rs. 10 each, Chairman Jonathan Alles told shareholders. LVT is already a publicly-traded company. 

“We have made an application to Colombo Stock Exchange to list LEF by way of an Initial Public Offering (IPO) which is being favourably considered. LEF will issue 120 million shares at Rs. 10 per share to raise Rs. 1,200 million through the IPO. Out of the total IPO proceeds around 60% will be utilised for investment purposes and the remaining 40% would be used for settling debt. Consequent to the IPO a deemed disposal profit of around Rs. 300 million will be recognised in Group retained earnings,” he said.

The firm has Rs. 727 million in hydropower projects which are operating or are being built with a total capacity of 20.5 MW. 

“Our total investment in the two wind power plants of an aggregate capacity of 15 MW stands at Rs. 667 million whilst the total investment in thermal power sector remains at Rs. 1,040 million, representing two projects in Bangladesh with a total installed capacity of 104.4 MW. Accordingly as at 31 March 2017 our total investment in energy projects stood at Rs. 2,434 million which is well diversified in terms of energy source such as hydro, wind and thermal,” the Chairman’s review said.  

In terms of invested amount the spread among hydro, wind and thermal energy is 30%, 27% and 43% respectively, it said. During the financial year under review, hydro power projects contributed Rs. 106 million to the net earnings of the Group whilst the contributions from wind and thermal power projects stood at Rs. 183 million and Rs. 224 million respectively. 

“The return on total investments in hydro power projects stood at 14% whilst the wind and thermal sector investments yielded an impressive ratio of 27% and 22% respectively.” 

The firm’s $3 million dollar investment in a 10MW hydro plant in expected to be commissioned in the middle of 2019.

“Our investment of $3 million which will offer 45% equity stake in a 10 MW hydro power project to be set up in Nepal is expected to materialise in the latter half of 2017. The project which is capable of generating in excess of 70 GWh of energy is expected to be commissioned in the middle of 2019. The strategic initiatives we have made during the past few years, such as entering into thermal power sector in Bangladesh and hydro power sector in Nepal have augmented our platform as a springboard for future growth,” he said.

Alles also noted the firm is eyeing another 114MW thermal plant in Bangladesh, a 20MW of wind in Sri Lanka and more solar power plants being tendered by the Ceylon Electricity Board.

*LVL Energy Fund Ltd. is a subsidiary of Acuity Partners Ltd., which is an equally held joint venture between DFCC Bank PLC and Hatton National Bank PLC.

(*Editor's note: The article previously referred to LVL Energy Fund Ltd. as Lanka Energy Fund and stated that it was a unit of the HNB group.)