Modi Energy right share gets department approval
5th February 2026, Kathmandu
Modi Energy Limited (MEL) has achieved a significant regulatory breakthrough by securing preliminary approval for its right share issuance from the Electricity Regulatory Commission (ERC) and the Electricity Development Department. The approval, granted on Falgun 21, 2082 (March 2026), allows the company to proceed with a major capital expansion plan. Modi Energy is authorized to issue right shares in a ratio of 1:0.90029, based on its current paid up capital of 2.90 billion rupees. This issuance is expected to raise approximately 2.61 billion rupees from the capital market.
Modi Energy right share
The move is strategically designed to strengthen the company’s financial health, primarily by reducing its long term bank debt and stabilizing cash flows for its operational projects.
Details of the Right Share Approval and Ratio
The ICFC Finance debenture approval for the “8% ICFC Finance Limited Debenture 2089” provides a timely opportunity for investors to secure a 7 year fixed return. With Kumari Capital at the helm of the issue management, the public offering is expected to open shortly. For ICFC Finance, this move represents a calculated step toward diversifying its funding sources and fueling its next phase of credit expansion in the Nepali market.
Key details of the approved issuance:
Ratio: 1:0.90029 (Approximately 9 shares for every 10 held).
Total Issue Size: 26,108,410 units (Approx. 2.61 billion rupees).
Current Paid up Capital: 2.90 billion rupees.
Face Value: 100 rupees per share.
The preliminary approval from the energy sector regulator is a mandatory precursor to the final submission to the Securities Board of Nepal (SEBON).
Operational Status and Project Overview
Modi Energy Limited operates the 20 MW Tallo Modi Khola Hydropower Project (TMKHP) located in the Parbat district. The project, a run of the river type, began commercial operations on September 30, 2021.
Energy Generation: The plant has a design discharge of 26.52 m³/s and an annual energy generation target of 117 GWh.
Financial Context: The company has faced challenges in the past related to power evacuation through a contingency route, which impacted its initial Plant Load Factor (PLF). The capital injection from the right issue is expected to provide the liquidity needed to address high gearing and improve interest coverage ratios.
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Ownership: The company is promoted by prominent business groups in Nepal, including the K L Dugar Group, Shanker Group, and Murarka Group.
Next Steps in the Regulatory Process
While the preliminary approval is a major milestone, Modi Energy must complete several additional steps before shareholders can subscribe to the shares.
SEBON Filing: The company will now submit its formal prospectus to the Securities Board of Nepal for the final “Public Issue Approval.”
Appointment of Issue Manager: The company is in the process of finalizing an agreement with a merchant bank to manage the sale and allotment of the shares.
Book Closure Announcement: Once SEBON gives the green light, the company will announce a “Book Closure Date.” Only shareholders holding the stock before this date will be eligible to apply for the right shares.
Strategic Importance for Shareholders
The 1:0.9 ratio represents a substantial offering, nearly doubling the current equity base. For investors, this is an opportunity to lower their average cost of investment, as right shares are issued at par value (100 rupees) while the market price of MEL has historically fluctuated at higher levels.
The successful completion of the right issue is expected to:
Lower Debt Obligations: Reducing the heavy interest burden from bank loans.
Improve Credit Rating: Strengthening the balance sheet may lead to an upgrade in the company’s issuer rating, which was recently revised by agencies like CARE Ratings Nepal.
Future Dividend Potential: By clearing debt, the company clears the path toward distributable profits in future fiscal years.
Conclusion
The preliminary approval for Modi Energy’s 2.61 billion rupee right share issuance signals a turning point for the company’s fiscal management. By addressing its high debt levels through equity, Modi Energy is aligning itself with the broader trend of financial restructuring in Nepal’s hydropower sector. Shareholders should remain vigilant for the upcoming SEBON approval and the subsequent announcement of the book closure date to ensure they can exercise their rights.
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