June, 13, 2019
Panasian Power PLC (PAP.N), one of Sri Lanka’s leading green energy solutions providers, announced the private placement to institutional investor Emerald Fund (subject to Colombo Stock Exchange and shareholder approval) – one of the largest private equity funds dedicated to Sri Lanka. At Rs. 3.20 per share the Emerald Fund will invest Rs. 400 million amounting to a 20% stake in the company.
The proceeds from the placement will go towards PAP’s strategic objective of increasing local capacity to 30MW across all sources by 2020 and generate an annual revenue of Rs. 1 billion. The company currently has potentially 15MW of solar power in the pipeline consisting of 9MW rooftop and 6MW ground solar, 2MW of which will be connected to the grid shortly. Once completed these projects are expected to generate an annual revenue of Rs. 400 million.
PAP also seeks diversification through foreign projects and has identified African countries like Zambia, Kenya and Mozambique as suitable areas for investment thanks to their high energy demands. The company has already made significant progress in these countries and has a positive outlook on their Africa strategy. Furthermore, with this latest capital infusion, PAP’s position in Africa is further strengthened and with the backing of the Emerald Fund the company will now be able to raise additional capital overseas to fund these projects and others.
The Emerald Fund is managed by NDB Zephyr Partners Limited, a joint venture between NDB Capital Holdings Limited (NCAP) and Zephyr Management L. P. (USA), and backed by international Development Financial Institutions (DFIs) such as International Finance Corporation (IFC), Deutsche Investitions-und Entwicklungsgesellschaft mbH (DEG) and Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V. (“FMO”).
With such stakeholders the Emerald Fund has developed a proactive investment philosophy which often involves active participation in the management of investee companies to improve the formulation and execution of the company’s strategy. The combined global network and relationships of NCAP and Zephyr have positioned the Fund as an attractive partner for Sri Lankan businesses looking to expand into overseas markets. To date the Fund has investments in Cleanline Linen Management (Private) Limited; JAT Holdings (Private) Limited; Idea Group Limited; and Consolidated Business Systems Limited. It is also in the process of conducting due diligence for investments in the sectors of digital media; information technology; and logistics.
In keeping with the Fund’s philosophy, it will help PAP in the implementation of its strategic plan. Emerald Fund will leverage its network to support the company’s business development initiatives; strengthen the management team; develop and implement performance management and retention strategies; optimize the capital structure of the company and reduce costs through financial structuring; and focus on sustainable growth, including improving the social and environmental compliance of the company.
This partnership comes on the heels of PAP posting the highest profit in the company’s history. Having grown revenue by 50% year-on-year and net profit margin by 66% during the same period the company holds the distinction of having the highest return on equity and among the lowest price to book value amongst its peers. Significant contributions to these stellar results came from the company’s portfolio of mini hydropower plants in Rathganga, Manelwala and Padiyapelella. Each has a number of years left on their contracts with an option for a 20-year renewal once they expire, therefore, ensuring their future contribution towards the company’s bottom line.
With this strong foundation Panasian Power seeks to diversify and expand beyond Sri Lanka’s borders to become a global energy supplier. Strategic partnerships with entities like the Emerald Fund facilitate the achievement of this goal and will secure the company’s future for years to come.
Panasian Power PLC was incorporated in 2002. It owns and operates mini hydropower plants and supplies electricity directly to the Ceylon Electricity Board. In 2017 the company diversified into solar energy to meet its revised energy targets and adapt to the changing energy landscape.
Photo caption: Dr. Prathap Ramanujam, Chairman & Chief Executive Officer - Panasian Power