It seems that the IPO market in Nepal is facing significant challenges, both from a regulatory and sectoral perspective. A total of 77 companies, including a large number from the hydropower sector, are eager to go public, but delays in the approval process are stalling their progress.
The absence of executive leadership at the Securities Board of Nepal (SEBON) since December 2023 has been a key factor. Although Mahesh Baral was appointed as the acting chairman, the lack of a permanent head seems to be hindering the IPO approval process. This leadership vacuum is a significant obstacle in an already slow-moving regulatory environment.
Additionally, the restrictions imposed by the parliamentary committee on IPOs for companies with a net worth of less than 90 percent have affected many companies, particularly in the hydropower sector. This restriction could be a response to concerns about the financial stability and long-term viability of companies in that sector, especially those attempting to offer shares to the public at premium prices. The Office of the Auditor General’s scrutiny over such pricing further complicates matters, adding an additional layer of uncertainty for both companies and potential investors.
This situation has put a considerable number of companies in limbo, waiting for clearance to launch their IPOs. The combined value of the IPOs sought by these 77 companies is substantial, at Rs 44.75 billion, which indicates the scale of potential market activity once approvals are granted.
The regulatory hurdles and leadership issues at SEBON have created a sense of uncertainty within the IPO market, making it a waiting game for both companies and investors. It will be interesting to see how SEBON and the Ministry of Finance address these challenges to move the approval process forward.
