Shabda Gyawali's Blog

 

In my personal opinion the mechanism introduced by SEBON  will bring some cheer and some confusion. Although this is a good step towards Fair Market valuation, there are too many discretionary variables. In the coming days, if not already, SEBON might need to setup an Investment Committee or Panel of Expert to approve the assumptions being consider for  FPO valuation.   For example:  Discount rate needed to calculate Discounted Cash Flow will depends  on the risk adjusted return of the individual company. Discount rate will also differ from company to company even in the same industry .  Similarly, on the Terminal Growth Rate-  Terminal Value of a company that owns a limited life asset (Hydro), should and will differ from perpetual nature type business (Commercial Banks/ Insurance) .   For 180 days average trading  price method- I think it would be  better if the liquidity factor of the share traded is also considered, ...

I SSUES  42 GW  Hydro Potential ( Most of the project are ROR )  Only 700 - 800 MW harnessed  Investment of about $7 to 8 billion each year Limited capacity of Local Banks to finance all the capital required  Non recourse project financing still not being tried by Local Banks  Possible Solution Similar to Indian Masala Bonds  Rupees Denominate  offshore issue bond  For example: Comps like GMR issues INR Bond in offshore (London, New york), proceed use to finance hydro project in Nepal. PPA in NPR. Less foreign exchange risk   Backstop by DFIs including IFC and ADB RISK No sovereign Credit rating of Nepal  Local Law limits Interest rate charged for foreign Debt - LIBOR + 5.5  Counter party risk  Dropping Energy prices in India.. 

On 14 th November, 2015 government of Nepal announced that it will be distributing fuel wood to pacify the hardship of acute fuel crisis faced by Nepali due to the ongoing “unofficial” blockage, political protest and disturbances in the major transit points. This benevolent gesture from the government could perhaps be the biggest blow to the nation touted as “hydro energy power house of South Asia”. Distribution of Fuel wood as a tool to response to energy security re-exposes Nepal preparedness and commitment for the sustainable development of its economy. Similarity, Myriad of frustrated, and fatigued consumer lining up for days with a hope to get half filled cylinders and fuel tanks is a tight slap to the rhetoric and hallow narratives that Nepal has “potential” to exploit 42 GW of hydro energy. This is the same rhetoric which we as a nation have been humming since mid-sixties, but till date not even 1% of the “potential” has been executed into reality. With our myopic view...

We often here that once the Nepali power plant meet the domestic demand, surplus power will be exported to India.. Recently came across a report, which paint a very gloomy scenario of some of the power distribution companies of India, particularly state owned dis-com of states neighbouring Nepal .... Wondering how Nepali energy will complete will India Energy and revenue risk associated with unhealthy financial situation of the discom companies

·          Launching Government startup fund – organize business plan competition for pre fab housing protype, future natural disaster prevention, mitigation  app or technology. Provide seed capital to top 5…. ·          Legalize marijuana and encourage ganja puffing tourists. Will increase tax revenue and boost tourism. If stoned already no stone can do harm... :-) here is a proof  ·           Sovereign Credit Rating  – economic cost of earthquake estimated around 50% of the GDP.  Thats about US 10BN. Government can raise domestically about 3%- 5% of GDP (1BN) without raising any eye brows of IMF. Rest need to be financed through external source. To raise international debt a proper sovereign rating from credit rating agencies could be useful. Shadow rating (CCC+) we currently follow does not take into factor l...

As the rescue work is all most done, relief works are under-way, it looks like relief effort will wind  down in couple of weeks....Now the turn comes for RECONSTRUCTION..Before I start  writing my thoughts on RECONSTRUCTION, I would go back in time and highlight few macroeconomic figures and trends in  Nepal before the devastating earthquake Nepal’s economy grew by an estimated 5.2% in fiscal year (FY) 2014 - See more at:  Source: http://blogs.adb.org/blog/adb-s-initial-analysis-economic-impact-nepal-earthquake#sthash.tslN7qRq.dpuf Balance of payment  SURPLUS till first half of 2015 was USD 349.2 MN (ADB)  Gross foreign exchange reserves till mid jan 2015 was USD 7.1 BN Nepal had signed PTA with India  Nepal has signed PDA with couple of hydro projects  International Banks including Societe Generale was in Nepal for appraisal for a hydro project  Total Market cap for stock market was about USD  9 + BN ...

Launching a new company presents unique challenges to the entrepreneur. Sorting out these hurdles as you is the only way to go about it. A couple of weeks ago, as a part of my usual deal scouting and exploring investment opportunities in the healthcare sector, I came across two young entrepreneurs. They were a few years out of college, and ready and enthusiastic to launch their ideas. These two aspiring entrepreneurs are working on a startup called E-aausadhi that plans to become an online, on- call pharmacy that will home-deliver medicine around the clock, with cash-on-delivery payment system. Despite having a credible business model (at least on paper) and relevant expertise of the founders (one of them is a medical doctor and the other a software/application developer), the venture is yet to be launched. Curious, I asked them why they hadn’t fully launched yet. Like many other fledging entrepreneurs, the founders of E-aausadhi confessed inability to secure loans or additional c...

While the local venture capital (VC) industry is still in its pre-fledlging phase, the future prospects in Nepal have started to brighten up. While the local venture capital (VC) industry is still in its pre-fledlging phase, the future prospects in Nepal have started to brighten up. With a relatively stable economy and rapidly growing disposable income, it should come as no surprise that the demands for investment continue to increase. VCs are finding several sectors particularly attractive – information technology, education, healthcare, agriculture, and tourism amongst others. Investment opportunities are also arising in more niche sectors like organic agri-business and handicrafts. Although an enabling environment for VC industry is broadening, it still has a long way to go. The four enablers that could support venture capital, help mature our entrepreneurial landscape and improve investors’ sentiments are the following: Click Here to Read 

IFC asks govt to bring guideline on rupee bonds | Business With Local capital already limited,and volatile exchange rate is this a good option ?

IFC concerned about NEA’s dilly-dallying over PPA | National | Business " Lower Solu Project Director Ashish Garg said the MoE and NEA have been postponing the PPA signing date, citing the lack of budget for the construction of transmission lines. Issuing the licence to these projects, the government had pledged to construct the transmission lines. The projects have paid a combined Rs 450 million in licence fees and have provided bank guarantee worth Rs 101 million. NEA Managing Director Rameshwor Yadav also said the NEA has not been able sign the PPA due to the possibility of wastage of energy during monsoon after a few years." Lower Solu in the past has gained lot of attention from  Development Finance Institutions (DIFs) for investments...NEA being  reluctance will not send a good signal to potential foreign investors...... 

A recent published white paper from Alternative Energy Promotion Center (AEPC) mentions the need  of venture capital/ equity investment to ease the access to finance situation in the small hydro power segment... This is what is mentioned in the white paper :- " Assistance in Raising Equity and loans   " Local community/developer need to be assisted/supported in equity and loan, equity investment, venture capital investment fund, long term soft loan etc. Venture Capital system should be established. A study on how venture capital provision may be introduced in Nepal including long term soft loan and equity investment." The white paper  mentioned "    A study on how venture capital provision may be introduced in Nepal  " My recommendation is to cover the following issues in the study    Quality of deal flow- Not  just " Jhola ma Khola"  Issue involving cost of capital, considering floating inter...

"Nepali cement is meeting only 75 percent of domestic demand, according to the Cement Manufacturers Association of Nepal. Cement and clinker worth Rs 4.53 billion have been imported in the first nine months of the current fiscal year, according to the Trade and Export Promotion Center. Cement is imported from India and the big development projects in Nepal are using imported cement. "  "Entrepreneurs claimed that the projects are buying foreign cement due to the waiver in customs duty and value-added tax (VAT) while importing construction material for the national priority projects." According to the Cement Manufacturers Association of Nepal (CMAN), the domestic cement industry has an installed production capacity of 5.58 million tonnes annually which is slightly higher than the annual demand of 5.42 million tonnes. However, cement manufacturers say their plants could have utilized their full capacity except for supply side constraints and government apathy. ...

This is what there website say " In its initial phase, the team will focus on a small number of geographies such as Northern Nigeria, South Sudan, Nepal and Myanmar. The Frontier Investments team will complement the strategies of CDC’s four core investment teams and may provide capital in all its forms. - See more at: http://www.cdcgroup.com/How-we-do-it/Types-of-capital/Frontier-investments/#sthash.EuPFtaW8.dpuf

" My focus would be on increasing capital investment and welfare activities in Nepal. Reviewing past work, I will continue the existing agenda of the NRNA. I have planned concentrating on two agendas— commercial investment and social investment funds . The commercial investment fund will be mobilised for the country’s economic development, while the social fund will be mobilised for charity work or to help the underprivileged people." click here to read more 

Investor confidence reaches new high as Chitwan tourism rebounds | Business

Here are few suggestion Establish ‘Single Window Clearance’ mechanism for starting a business, and establish time-bound processes for the same. Set up online information and application portal for processes relating to doing business. Permit self-regulation and self-compliance for businesses with turnover less than Rs 25 crore. Stringent penalties may be used to prevent potential misuse. Facilitate labour law reform and ease compliance norms with labour laws. This is essential in triggering entrepreneurial activity in core sectors. Ease investment and exit norms for equity investments into early stage ventures. Establish expeditious procedures for closing of businesses, thereby bringing down the time, cost and complexity of doing so. Source: StartupCentral 

You often hear Nepali MFIS blowing horns of their success by indicating their customer base growth rate MFIs needs to go beyond tracking -   Number of Customers reach to measure their social impact... Here is an excellent case study on social impact measuring metrics of MFIs............................ Click here to read