A delay in decision-making by the Securities Board of Nepal (SEBON) has resulted in a significant backlog of Initial Public Offering (IPO) applications. As of Monday, 84 companies have submitted proposals to issue a combined total of 387.384 million shares, amounting to Rs 54.34 billion.
Since Santosh Narayan Shrestha assumed the role of SEBON chairman, only a handful of companies have received IPO approval. Many applications submitted as far back as 2079 BS remain pending.
Among the companies awaiting approval, hydropower firms dominate the list, with 43 applications. Additionally, 16 companies from the production and processing sector have filed IPO requests. Other applicants include 11 companies from various sectors, 7 from the hotel and tourism industry, 3 each from the investment and microinsurance sectors, and 1 microfinance company.
Several factors have contributed to the slowdown. Shrestha’s ability to grant approvals has been hindered by an ongoing investigation by the Commission for the Investigation of Abuse of Authority (CIAA), scrutiny from the Auditor General’s office, and interventions by the Public Accounts Committee of the House of Representatives.
In Poush last year (mid-December to mid-January), the Public Accounts Committee directed SEBON not to approve IPOs for companies with a net worth below 90. SEBON began enforcing this directive in Asar (mid-June to mid-July), effectively stalling approvals for lower net-worth firms. Furthermore, the Auditor General’s office has raised concerns about IPOs being issued at premium prices.
Since taking office on November 25, Chairman Shrestha has approved IPOs for only five companies: Nepal Micro Insurance, Crest Micro Life Insurance, Om Megashree Pharmaceuticals, Pure Energy Limited, and Sanvi Energy Ltd.
Most of the companies in the pipeline seek to issue IPOs through various pricing methods, including premium pricing and book building, alongside the standard face value. SEBON is currently reviewing financial documents and granting approvals only to those with complete and updated information.
