Mackwoods Energy Ltd, a subsidiary of the Mackwoods group is going public to raise some Rs 350 million to build hydro power plants and expand existing business. The company is also open to public subscriptions in other sectors they are in, in the future, officials said.
“Mackwoods is open to other IPOs (Initial Public Offerings) in other sectors in the future,” Arjuna Yatawara Managing Director, Mackwoods Energy told the Business Times on the sidelines of the IPO launch this week in Colombo. When asked whether it was wise to launch this IPO at a time when the markets weren’t performing, Mr. Yatawara noted that there’s nothing called the 'right time' to launch an IPO. “The share issue price at Rs 14 is attractively priced and we feel it will be oversubscribed,” he added.
Chairman Mackwoods Group, Nirmali Samaratunga said, “Recognizing the power sector as an essential driver of socio-economic development of the country, the Mackwoods Group has strategically focused on this sector through its subsidiary Mackwoods Energy Ltd, as a priority.”
She added that Mackwoods’ aim is to rapidly harness the available sources of energy particularly renewable energy, and contribute to meet the fast growing energy need of the country through the provision of cost effective energy solutions. “We invite the public to participate in this initiative in this high potential sector and be a part of the 170 year heritage of Mackwoods whilst contributing the country’s development.”
The diversified conglomerate which has a 42% presence in telecommunications and 13% in plantations is going into power plants, marine engineering and marine power generation, newly supplying 6.2 Mega Watts (MW) to the national grid.
The company will use the IPO money on Rs. 80 million for finance working capital requirements for thermal energy generation, Rs. 175 million to finance five small hydro power projects and Rs. 72 million to diversify into related products, markets and services.
Whilst hydropower has been the primary source of electricity generation in Sri Lanka until a few decades ago, the continuous rise in electricity demand has resulted in thermal power generation using fossil fuels emerging as an equally dominant contributor to the country’s electricity supply. In 2010, the contribution of thermal power to the national electricity demand stood at 47% whilst the rest was supplied using hydropower. In addition to the above, much emphasis has been placed recently on the use of Non-Conventional Renewable Energy (NCRE) sources such as small hydro, wind and biomass to meet the growing electricity demand of the country. The installed capacity in 2010 amounted to 2818 MW where total electricity generation for the same period stood at 10714 GWh in order to meet a maximum demand of 1955 MW.