Gets Sebon nod to issue 5.28 million units of shares
KATHMANDU, June 22: Shivam Cements Ltd has received approval from the Securities Board of Nepal (Sebon) to launch its initial public offering (IPO).
With this, Shivam Cement Ltd has become the first cement company in the country to go public.
According to the Sebon, it has decided to allow the cement company to float primary shares to the public at a premium price.
The cement company will now offer it shares at Rs 300 per unit to locals affected by its plant and limestone mine, while general public will be able to purchase shares at Rs 400 per unit.
Shivam Cement Ltd plans to float a total of 5.28 million units of primary shares. While 10 percent of the shares, or 4.4 million units, will be offered to general public, 2 percent is reserved for the locals. Locals of Makawanpur, where the Shivam Cements Ltd’s manufacturing plant and mine is based, will be able to subscribe a total of 880,000 million units.
The cement company, which claims to be the largest manufacturing Greenfield project in Nepal, aims to produce 1,250 tons per day. It has its own limestone mine.
The decision of the cement company to tap into the public’s pocket for capital comes after the recent measures introduced by the government, particularly the Sebon, to encourage real sector companies to go public and list their shares in the secondary market for trading.
Among others, Sebon last year decided to allow companies to float their shares at a premium price, ending the requirement to sell shares to the public at face value of Rs 100. Similarly, the government also offers certain tax discount to manufacturing companies who offer shares to public.
Siddhartha Capital Ltd is the issue manager for the IPO. Dhruba Timilsina, the CEO of Siddhartha Capital Ltd, told Republica that they plan to float the shares to the locals first by mid-July. From the IPO, the cement company plans to draw a total of Rs 2.02 billion.
“After allotting shares to the locals, which we assume will take nearly a month, we will float shares to the general public,” added Timilsina.
The approval of Shivam Cement’s IPO comes in the wake of recent slackness in the capital market. However, the company seems to be confident that the IPO will draw significant response from the general public. “As our share market is dominated by the banking sector scrips, the IPO of the cement company offers a good opportunity for the portfolio diversification for investors,” he said. “The fundamentals of the cement company is also good and offers good return prospect for shareholders,” he added.
According to Timilsina, NIBL ACE Capital Ltd has underwritten all primary shares of the company, pledging to buy all the shares that go unsold.
The cement company, which is promoted by Sharda Group among other local investors, also holds 30 percent ownership in the Hongshi-Shivam Cement -- a Nepal-China joint venture company that recently started production of Hongshi Cement.