CG, JV partner acquire controlling stake in Himal Hydro
KATHMANDU, July 24: Chaudhary Group, a leading Nepali conglomerate, has acquired over 30 percent stake in Himal Hydro and General Construction Limited, a construction company engaged in building hydropower projects and tunnels, for Rs 272 million.
The group, owned by industrialist Binod Chaudhary, acquired the stake with the help of India-based Coastal Projects Limited, its 50-50 joint venture partner in Nepal.
Chaudhary Group had been seeking to gain control of Himal Hydro from the time it came to light that Nepal Jalabidyut Prabardhan Tatha Bikas Limited (NJPB), a holding company which controlled 78 percent stake in Himal Hydro, was offloading all the shares belonging to Yogendra Shrestha.
Shrestha, who owned 82 percent of NJPB shares, was forced to shed his entire stake after he was implicated in a case involving embezzlement of Rs 2.66 billion from Nepal Share Markets Finance Company. Shrestha was the chairman in the finance company.
To recover the money, Nepal Rastra Bank, the banking sector regulator, appointed Nepal Share Markets as the custodian of NJPB shares owned by Shrestha. Nepal Share Markets then issued a public notice asking interested domestic and foreign investors to bid for Shrestha´s shares.
Although Chaudhary Group was keen to purchase the shares on its own, it was not able to do so as Nepal Share Markets introduced a discriminatory policy that required domestic companies participating in the auction to make entire payment within a week of being declared the preferred bidder.
Because of this provision, Chaudhary Group asked Coastal Projects Limited, a leading Indian construction company and Chaudhary´s 50-50 joint venture partner in Nepali territory, to take the lead in the auction, as foreign companies were given 15 days to make a pledge to transfer the payment.
Subsequently, Coastal Projects, which had quoted a price of Rs 544 million for Shrestha´s shares, was declared the preferred bidder.
“Although we are disappointed with Nepal Share Markets for being biased against domestic investors, we were lucky we did not lose anything in the process as we had previously entered into an agreement with Coastal Projects to become its equal partner in all the projects it undertook in Nepali territory,” Ashish Sharma, general manager of Chaudhary Group, who had overseen the acquisition process, told Republica.
As per this agreement, Chaudhary Group can now lay claim to half of whatever was bought by Costal Projects in NJPB.
Currently, Coastal Projects controls 82 percent stake in NJPB. This translates into 64 percent holding in Himal Hydro. This automatically makes Chaudhary Group owner of 41 percent shares in NJPB and 32 percent shares in Himal Hydro.
Other major shareholders in Himal Hydro are Nepal government, which holds 11 percent stake in the company, and United Mission to Nepal, which holds another 11 percent shares in the company. The rest of the company shares belong to NJPB employees.
Over three-decade-old Himal Hydro and General Construction, which was involved in construction of mid-sized hydro projects such as Jhimruk (12MW) and different phases of work at Middle Marsyangdi Hydroelectric Project and Manakamana Cable Car Project, is currently involved in development of various hydropower projects, such as 22-MW Mai Hydropower Project and three-MW Bhairabkunda Small Hydroelectric Project.