With a record-breaking IPO, LTL Holdings wants to replicate its success in East Africa and is offering a blueprint to foreign investors after achieving a record-breaking IPO on the Colombo Stock Exchange.
LTL has announced a Rs 20 billion IPO, the largest in the history of the Colombo Stock Exchange.
Explaining the company’s strategy in an exclusive interview with Global CEO Magazine, Numan Marikkar, CEO of LTL Holdings, said the company embarked on the regional plan after Sri Lanka achieved almost 100% electrification. “Currently, the ratio is 99.5%. We realised it was time to find new markets for our products and have started exporting Sri Lankan-made transformers to Iraq. Since then, we have never stopped travelling abroad,” he explained.
The company has since built power plants in Bangladesh and Nepal and is now looking towards Africa, Marikkar further explained. “Most parts of Africa are generally 40-50 per cent electrified. For the last 10 years, we have been exporting transformers and the like.
“Our energy plan is to aggressively expand into Continents where the demand is there. We are focusing on countries with electrification rates below 50 per cent, such as Tanzania, Rwanda, and Uganda. Moreover, as a local company, we can take advantage of tax incentives in these countries while also being close to our customers and helping them build local technical knowledge,” Marikkar said.
The construction of power plants in these countries is still in a very early stage. The company has already built a transformer manufacturing plant in Tanzania for $22 million. “So, in the future, we will be even more competitive in this market,” Marikkar further elaborated said.
He noted that the company derives 70% of its revenue from foreign currency under power purchase agreements and operation and management contracts. “These are mechanisms to hedge exchange risk through clearance into local and hard currencies and the inflation index of the respective currencies,” he said, adding that this is another key reason for pursuing an IPO so close to the elections. The company’s contribution to power generation is expected to be 78% this year and 87% next year.
The company fixed the share price at Rs 14.50.
The company is valued at Rs 930 crore for 16.5 million shares, and the management realised that the original share price was higher and decided to split the shares. “That’s why we have set a reasonable price so that everyone can afford it. We are aiming for affordability and a wide subscriber base with 500 shares per subscriber, especially for those with less than Rs 10,000. Investors have committed 75% of the equity. Further interest is expected. Investors are looking for opportunities in the energy sector with stable stocks to improve lives. Ultimately, they will transition to green hydrogen production once LTL technology is commercially available,” Marikkar added.
