My comment on LI FA DA YAN ji's post about BFI's and hydro-power companies
In Nepal, hydro-power companies own hydro-power projects. The hydro-power mother companies are like Chilime, BPCL, AHPC etc. These companies get dividend from sister companies/subsidiaries/affiliated projects entities. Hence, buying shares of such companies is less risky than projects of 2 Megawatts or even 25 Megawatts. Therefore, I advise friends to invest in conglomerates such as above mentioned companies if you wish to take less risk compare to individual project companies or the subsidiaries of such conglomerates. However, individual project may do better and you may get higher profit also.
Now, coming to your question of investing in 2 MW/25 MW hydro projects
as promoter, the lock up period is generally that of 6 years - about 3
years before IPO and another 3 year after IPO. One major benefit
compared to banks, all its shares become ordinary shares after the
locking period and market price will be better in comparison to BFIs.
However, always return depends on performance of a company/project.
There are 3 factors that help us building our portfolio - 1. our understanding of the core business of a company/sector, 2. growth prospect of the sector/company, and 3. our portfolio preference - diversification or concentration.
Hence, I advise you to reassess your situation and decide.
Just food for thought -
Banking institutions are better regulated and there is policy clarity. Hydro-power companies are relatively new entities and could be more vulnerable/might have better prospects, when policy framework becomes more complete.
If you have higher risk appetite, hydro-power companies are better. In any context, notwithstanding risk factor, hydro-power companies could be far better in regard to return, if you could hold for 3/4 years. If you just compare between promoter shares of BFIs and hydro-power companies, certainly hydro-power companies could be far better in 3/4 years holding period. For me, I have made a balanced portfolio mixing primarily BFIs and hydro-power companies.
However, always return depends on performance of a company/project.
There are 3 factors that help us building our portfolio - 1. our understanding of the core business of a company/sector, 2. growth prospect of the sector/company, and 3. our portfolio preference - diversification or concentration.
Hence, I advise you to reassess your situation and decide.
Just food for thought -
Banking institutions are better regulated and there is policy clarity. Hydro-power companies are relatively new entities and could be more vulnerable/might have better prospects, when policy framework becomes more complete.
If you have higher risk appetite, hydro-power companies are better. In any context, notwithstanding risk factor, hydro-power companies could be far better in regard to return, if you could hold for 3/4 years. If you just compare between promoter shares of BFIs and hydro-power companies, certainly hydro-power companies could be far better in 3/4 years holding period. For me, I have made a balanced portfolio mixing primarily BFIs and hydro-power companies.
