PACRA Maintains Rating of Hub Power Holdings Limited | Sukuk
|Rating Type||Debt Instrument|
The rating reflects Hub Power Holdings Limited's ('Hub Power Holdings' or 'the Company') holdco structure with focus on expanding energy generation capacity through indigenous resources. The Company is a wholly owned subsidiary of The Hub Power Company Limited (HUBCO), a very strong player in Pakistan's energy sector with a generation capacity of 1,292MWs, which is now increased to 3,581MWs. Hub Power Holdings has invested in China Power Hub Generation Co. (Pvt.) Ltd. (47.5%) and ThalNova Power Thar (Pvt.) Ltd (38.3%). The Company completed the acquisition of Eni’s business in Pakistan, through a 50:50 joint venture company, Prime International Oil & Gas Co. Lately, the Company has incorporated China Power Hub Operating Co. (Pvt.) Limited through a JV agreement with 49% stake to operate and maintain China Power's plant. Business risk profile of the Company consists largely of profit share from associate, China Power; which is constantly receiving generation payments. achieved financial close and its project completion date (PCD) was Feb-23. However, ThalNova is yet to announce project completion date (PCD). While, Prime International acquired and took charge of all the upstream operations of ENI in Dec-22. During the nine-month period ended on Mar'23, the profitability of the Company significantly increased by ~183% to PKR ~13.02bln (Jun'22: 4.6bln). The Company issued a Sukuk of PKR 6bln on Nov-20 mainly to settle debt at group level and is fully guaranteed by HUBCO. Principle and Profit repayments are aligned with dividend inflows with sufficient cushion in initial years. Moreover, demonstrated support of sponsors and their strong acumen of power sector dynamics benefits the ratings.
Consolidation of investments at holding company level and formalizing a strong and effective mechanism for making investment and monitoring performance will be critical, going forward.
Hub Power Holdings Ltd. is a wholly owned subsidiary of The Hub Power Co. Ltd. The Company was incorporated in 2015 as a public unlisted company under the Companies Ordinance,1984 (now the Companies Act,2017). The principal activities of the Company are to invest in new opportunities in energy sector. Mr. Aly Khan is the BoDs Chairman, while Mr. Kamran Kamal heads the Company as its CEO.
Hub Power Holdings has issued an unsecured, privately placed, Islamic Certificates ("Sukuk") of PKR 6bln to settle debt at group level. The instrument has a tenor of 5 years (grace period 3 years) and is issued at discount, covering profit payments for the first two years. The differential profit was settled at the end of the discounting period on 14, Nov'22. Thereafter, profit will be payable semi-annually in arrears at the rate of 6M K250bps. Principle will be paid in 4 equal semi-annual installments.