Shiv Shree Hydropower Opens Auction of Unsold Rights Shares – Open to All Investors
6th November 2025, Kathmandu
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Shiv Shree Hydropower Ltd (SSHL) has initiated a crucial step in its capital restructuring process by opening the auction for 865,845 units of its unsubscribed rights shares.
Shiv Shree Opens Auction
This event is more than a routine corporate action; it is a major investment opportunity, open to all investors, including existing promoter shareholders, the general public, companies, and institutions, to secure a stake in Nepal’s vital hydropower sector at a competitive minimum price. The auction, managed by Citizens Capital Limited, represents a strategic effort by the company to complete its capital raising and strengthen its balance sheet, a move that is essential for its long-term operational stability and future project financing.
The Investment Gateway: Auction Key Details and Mechanics
The auction mechanism for unsubscribed rights shares provides a transparent and market-driven method for the company to finalize its capital injection. For the general public and institutional investors, this presents a significant chance to acquire shares at a price determined by competitive bidding.
Shares on Offer: A total of 865,845 units of unsold rights shares are available for bidding. These shares were not subscribed by existing shareholders during the initial rights issue period from Bhadra 19 to Ashoj 23, making them available to the broader market.
Minimum Bid Price: The floor price is set attractively at NPR 100 per share. This is the face value of the stock, meaning bidders must place their bids at this price or higher. Given that hydropower stocks often trade at a significant premium over their face value in the secondary market, this minimum price provides a strong entry point for potential investors.
Application Requirements: Investors are required to apply for a minimum of 100 units. Crucially, there is no upper limit on the maximum number of shares one can apply for, allowing large institutional investors and high-net-worth individuals to bid for the entire available quantity, provided they adhere to regulatory limits on share ownership. Bids must be submitted in multiples of 10.
Sealed Bidding Process: The sealed (confidential) bid methodology ensures fairness, where the cut-off price is determined by the highest price at which all available shares can be successfully allocated. Only bids placed above the final cut-off price will receive the shares.
The bid submission window is critically important, concluding on Kartik 27 (Thursday) until 3 PM. This tight deadline necessitates swift action from interested parties. Bidders must submit their applications at the issue manager’s office at Citizens Capital Limited in Dillibazar, or at designated branches of Citizens Bank across Nepal, including key locations like Janakpur (Bhanu Chowk), Biratnagar, and Pokhara (New Road).
Impact on Company Capital and Project Financing
The primary rationale behind the initial 1:1 rights issue was to raise capital—in the case of SSHL, an issue worth over NPR 1.47 billion—to address critical financial needs, particularly the repayment of bank loans. A successful auction is vital for the company’s financial health.
Strengthening the Balance Sheet: Hydropower projects are inherently capital-intensive and often carry high leverage. Utilizing the proceeds from the rights issue and this subsequent auction to retire high-interest debt will significantly reduce the company’s finance costs. This reduction in the debt-to-equity ratio will strengthen the balance sheet, which is a key factor for securing better terms for future financing and for improving the overall financial resilience of the company.
Addressing Operational Challenges: For companies like Shiv Shree Hydropower, which have faced operational hurdles, including past issues with erratic hydrology and project delays leading to cost escalations, a healthy capital base is necessary to ensure smooth operations and necessary maintenance. The successful completion of the auction is a necessary step towards moving the company into a phase of sustainable profitability and generating better returns for shareholders.
Assessing the Opportunity: Risks and Rewards in Hydropower Investment
Investing in the auction shares requires careful consideration of both the potential rewards and the inherent risks associated with the hydropower sector in Nepal.
Potential for Discount: If the current market price of SSHL shares is significantly higher than the eventual cut-off price determined by the auction, successful bidders stand to gain a theoretical acquisition discount. This is the primary allure of an auction for the general public.
Sectoral Risks: Investment in hydropower is subject to unique risks, including hydrology risk (fluctuations in river water flow), interest rate volatility on existing and future loans, and counterparty credit risk tied to the Power Purchase Agreement (PPA) with the Nepal Electricity Authority (NEA). Potential bidders should diligently assess the company’s financial fundamentals, including its Earnings Per Share (EPS) and Book Value, to make an informed decision beyond the face value of the bid.
The auction of Shiv Shree Hydropower’s unsubscribed rights shares provides a timely opportunity for a wide array of investors to participate directly in Nepal’s energy sector. The process of sealed bidding ensures a competitive yet transparent pathway to ownership, making the closing deadline on November 13 a date of significant interest for the entire capital market.
For More: Shiv Shree Opens Auction
