In the fiscal year 2024/25, Nepal’s secondary capital market saw remarkable activity, with over Rs 61 billion raised by various companies, according to data released by the Securities Board of Nepal (SEBON). This substantial amount was mobilized through several instruments, including Initial Public Offerings (IPOs), Further Public Offerings (FPOs), rights shares, debentures, and mutual funds, highlighting the growing importance of the capital market in financing and investment.
A total of 14 companies received SEBON’s approval to issue IPOs, collectively floating 38.32 million shares at a face value of Rs 100 each. This initiative raised Rs 3.83 billion in fresh capital from the public. In addition, five companies opted for Further Public Offerings (FPOs), which allowed them to raise Rs 1.56 billion from investors by issuing additional shares through the secondary market.
Rights share issuance was also a popular method for capital mobilization during the fiscal year. Seventeen already-listed companies were permitted to issue 15.4 million rights shares, generating an additional Rs 15.41 billion. This allowed companies to raise funds directly from their existing shareholders, strengthening their capital base without diluting ownership.
Another significant contribution came from banks and financial institutions. Although traditionally reliant on customer deposits for capital, nine institutions turned to the capital market to address liquidity concerns and raised Rs 25.30 billion by issuing debentures. These long-term debt instruments allowed them to secure fixed-interest funding and diversify their capital sources.
Meanwhile, mutual funds also witnessed significant growth. SEBON approved 20 mutual fund schemes during the fiscal year, allowing them to issue fund units worth a combined Rs 15.20 billion. These funds have increasingly become a preferred investment vehicle for the general public, offering diversification and professional management.
Altogether, SEBON approved capital mobilization worth Rs 61.30 billion through the secondary market in FY 2024/25. This indicates a gradual shift in Nepal’s financial system from a traditionally bank-based model to a more market-based model, where the capital market plays a critical role in financing the economy.
Despite this positive trend, the overall capital raised fell short of previous expectations. One major reason for the slower momentum was the prolonged vacancy in the position of SEBON’s chairperson, which caused significant delays in the approval process. Without leadership at the helm, the regulatory body struggled to process applications efficiently, leading to a stagnation in capital-raising activities.
Furthermore, SEBON adopted a more cautious approach to approving new issues after the Public Accounts Committee of Parliament advised against allowing companies with a net worth below 90 to raise capital from the primary market. This directive led to stricter scrutiny of applications, further slowing down the issuance process.
Nevertheless, there has been a noticeable increase in financial institutions turning to the capital market—particularly through debenture issuance—reflecting a changing trend in how capital is sourced in Nepal. As regulatory frameworks continue to evolve and market mechanisms mature, Nepal’s capital market is likely to play an even more pivotal role in supporting economic growth and investment in the years to come.
