Investors, company officials meet before Lalpir IPO

Company delighted at overwhelming response it has received so far.

LAHORE: The much-awaited public subscription of 37.9 million shares of Lalpir Power Limited (LPL) will begin on July 3 and remain open till July 4, 2013. Lalpir Power is an independent power producing company owned by the Nishat Group.

In a briefing held by company management and its joint book runners at the Lahore Stock Exchange, officials said that the book-building portion has been successfully closed, with an overwhelming response from both financial institutions and high net worth Individuals.

The shares will now be offered to the public at a price of Rs22 per share (inclusive of Rs12 premium), determined through the Dutch Auction Method.

Briefing the participants, AKD Securities Chief Executive Officer Farid Alam said that the response had been massive so far, revealing that the company received total bids for 169.35 million ordinary shares against an offering size of 28.5 million shares. “We are expecting the same response in the general public offering, so the Green Shoe option is there, which may offer an additional 18.99 million ordinary shares at the same price,” he said.

Lalpir’s Chief Finance Officer, Khalid Qadir, said that the company is willing to convert their oil-based plant to coal, but that the move depends on government policy. He said the gross generation capacity of the plant is 362 megawatts (MW), with a net generation dependable capacity of 350MW. The plant operated with a load of 86% in 2012 according to official records, but Qadir said that the plant is currently operating on 97% of its load capacity. “Despite the fact that we are willing to shift to coal-based technology – which will take at least three years, during which our plant may be closed for up to a year – we are [also] working to make our plant more fuel-efficient,” he said.

The company has been incurring fuel losses due to excess fuel consumption. The average fuel consumption for Fiscal Year 2011 and 2012 has remained at around 241.20 grammes per kilowatt-hour.

To improve efficiency, LPL is implementing a turbine retrofit project, which is expected to improve thermal efficiency by 1.5%. This will lead to cumulative savings in fuel costs of around Rs9.72 billion from calendar year 2015 onwards. A one gramme improvement in consumption will result in savings of Rs121.86 million per year at the current price of furnace oil, Qadir said.

Published in The Express Tribune, July 3^rd, 2013.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.