Shiva Shree Hydropower Bonus Share Allotment
19th October 2025, Kathmandu
Shiva Shree Hydropower Limited (SSHL) has completed the allotment of its ambitious 1:1 rights issue, but the market response has left a substantial block of shares unsold. With 865,845 units remaining unclaimed by existing shareholders, the company is now preparing for a highly anticipated auction.
Shiva Shree Hydropower Bonus Share
This development is not just a procedural next step but a critical financial event that will significantly influence the company’s capital structure and future operational stability, offering a fresh investment opportunity for the broader public.
The completion of the rights issue allotment, managed by Citizens Capital and finalized on Asoj 31 (October 17, 2025), confirms that out of the 1,476,400 units offered, a significant portion—approximately 58.65%—did not find buyers among the eligible shareholders. This high non-subscription rate, which contrasts sharply with typical public offerings, underscores the current investor sentiment toward the hydropower sector and the specific financial position of SSHL. The subsequent auction of these unclaimed shares will be crucial in ensuring the company secures the intended capital injection to meet its financial objectives.
The Strategic Significance of the Unsold Shares Auction
The decision by SSHL to conduct a 1:1 rights issue was primarily a move to shore up its financial foundation. Reports suggest the company, which operates the 22.2MW Upper Chaku ‘A’ Hydroelectric Project, is heavily leveraged, with a debt-to-equity ratio noted to be extremely high. The original capital-raising target of the full rights issue was approximately NPR 1.47 billion (14,764,000 shares multiplied by Rs. 100 face value). This capital was intended to be utilized, at least in part, to chip away at its substantial outstanding debt, which has been cited as a major constraint on its long-term financial health.
The forthcoming auction of the 865,845 unclaimed shares directly addresses the shortfall from the rights issue. It represents a second, and often more competitive, opportunity for the company to raise the necessary funds. The success of this auction is paramount because it dictates the final amount of equity capital injected into the company. If the shares are successfully sold at a premium to the face value of Rs. 100, the company will not only complete its capital expansion plan but also generate an additional premium reserve, further strengthening its net worth.
Key Financial Impact of a Successful Auction:
Debt Reduction: The primary goal of the capital raise is to ease the company’s high debt burden. Every successful share sold through the auction brings SSHL closer to achieving a more manageable debt-to-equity ratio, which is vital for long-term sustainability in the capital-intensive hydropower industry.
Capital Structure Stabilization: Completion of the rights issue, including the auction portion, will see SSHL’s paid-up capital increase significantly. The total shares outstanding are expected to roughly double from the pre-issue amount (around 14.76 million shares) to approximately 29.53 million shares once all issued shares are listed. This stronger capital base is essential for a publicly listed company.
Market Perception: A well-subscribed auction, despite the previous low uptake, can send a positive signal to the market, indicating that new investors see value in the company at current market prices, even if existing shareholders opted not to apply.
Understanding the Auction Process and Investor Opportunity
The auction process for unsold rights shares in Nepal is governed by the Securities Board of Nepal (SEBON) regulations and is a standardized procedure. Unlike the rights issue, which is restricted to existing shareholders at face value, the auction is open to the general public, institutions, and even current shareholders.
Key Features for Interested Bidders:
Price Discovery: The shares are sold through a bidding process, meaning the final selling price is determined by market demand, not a fixed rate. Bidders submit sealed bids at a price equal to or greater than the minimum bid price (which is typically set at the face value of Rs. 100 per share).
Allotment Mechanism: Allotment typically follows a cut-off price based on the highest successful bid. Bidders who quote a price at or above this cut-off price are allotted shares, often on a pro-rata basis if the total demand exceeds the available quantity at the highest price points.
Investment Opportunity: For new investors, the auction presents a chance to acquire shares in SSHL without the necessity of being a shareholder on the book closure date (Sawan 16). Given that the current market price of SSHL shares is often above the Rs. 100 face value, the successful bid price will likely reflect a premium. Savvy investors analyze the stock’s current market price, its book value, and future earnings potential to determine their competitive bid.
Context of the Non-Subscription
The high volume of unclaimed shares is a critical data point. For a 1:1 right share issue, the non-subscription rate of approximately 58.65% is notable. This low subscription could be due to several factors, including shareholders’ liquidity issues, a negative outlook on the company’s financial performance (given historical issues with operations and high leverage, as previously reported by financial analysts), or a perceived lack of value when considering the adjusted market price post-issuance. Therefore, bidders in the upcoming auction must undertake thorough due diligence, assessing the company’s recent operational stability, revenue growth from its 22.2 MW project, and the transparency of its reported financials before placing a bid.
What’s Next: The Path to Listing
The remaining 865,845 shares will now be managed by the issue manager, Citizens Capital, for the auction phase. Following SEBON guidelines, the company’s sales manager is expected to publish a formal auction notice shortly, detailing the application period, minimum bid price, and the submission procedure.
Once the auction is complete and the shares are allocated to the successful bidders, the final step involves listing the newly issued shares on the Nepal Stock Exchange (NEPSE). The successful infusion of this capital, whether through the rights application phase or the upcoming auction, is a definitive step toward achieving the company’s stated goal of bolstering its financial resources for its ongoing projects and long-term viability. The market will be keenly observing the auction results as a measure of investor confidence and a predictor of the share’s future price trajectory.
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