LVL Energy Fund announces plans for Rs.1.2bn IPO

LVL Energy Fund Limited (LEF), a subsidiary of Lanka Ventures PLC, has applied for a Rs. 1.2 billion initial public offering (IPO) at the Colombo Stock Exchange to expand its investments and settle existing debt.

“We have made an application to Colombo Stock Exchange to list LEF by way of an IPO, which is being favourably considered,” Lanka Ventures PLC Chairman Johnathan Alles said in the firm’s annual report.

Lanka Ventures is a joint venture between Hatton National Bank PLC (HNB) and DFCC Bank PLC.
Through the IPO, LEF will issue 120 million shares at Rs. 10.00 per share to raise Rs. 1.2 billion, according to Alles.

“Out of the total IPO proceeds around 60 percent will be utilized for investment purposes and the remaining 40 percent would be used for settling debt. Consequent to the IPO a deemed disposal profit of around Rs. 300 million will be recognised in Group retained earnings,” Alles added.

LEF last year issued shares valued at Rs.8 per share which led to Lanka Ventures increasing its ownership marginally.

Lanka Ventures owns 71.79 percent of shares in LEF with an investment of Rs. 755.09 million. LEF invests in equity and equity related financial instruments of new and existing companies in Sri Lanka which undertake projects with potential for high growth.

Lanka Ventures has invested Rs.727 million in hydro power projects with a total capacity of 20.5 Megawatts (MW), Rs. 667 million in two wind power plants with a total capacity of 15 MW, and Rs. 1.04 billion in two thermal power projects in Bangladesh with a total capacity of 104.4 MW.

Some of these investments are through LEF, which enjoys a subsidized tax rate of 12 percent. It has Rs.527.41 million in bank borrowings from HNB and DFCC.