With a new stock exchange promoted by the private sector coming in the near future, the government-owned Nepal Stock Exchange (Nepse) is moving ahead with its restructuring to bring in a foreign strategic partner and domestic investors. Nepse had assigned an external expert to draft a report on its restructuring. The report has proposed to offload the ownership of the government and government agencies by adopting the practice of international capital markets. NEPSE spokesperson Murahari Parajuli said that the restructuring process has been started by changing the share structure of the stock exchange. The report has suggested keeping the company’s ownership of a single promoter not exceeding 15 percent. It is also mentioned that Nepse’s paid-up capital will reach Rs 3bn, as per the new regulatory requirement. According to the new regulation introduced by the Securities Board of Nepal (Sebon), the minimum paid-up capital of the stock exchange company should be Rs 3bn. Accordingly, the report has proposed to increase Nepse's paid-up capital from the current Rs 1bn to Rs 3bn.

The report has proposed to bring a foreign strategic partner in Nepse giving a 15 percent stake which will bring the government's stake down to 33.33 percent from the current 58.66 percent and give 21.67 percent to domestic institutional investors. The report suggested Nepse issue the initial public offering (IPO) amounting to 30 percent of its paid-up capital.

A Nepse board meeting on April 30 has already passed a resolution in this regard and forwarded it to the Ministry of Finance for approval. “We have submitted a proposal to the ministry to change the share structure by bringing in private investment and foreign partners,” said Parajuli. “The process will move ahead after the proposal is approved by the ministry.” Nepse has planned to bring foreign strategic partners with the objective to introduce new technologies and business strategies. It also plans to bring in domestic institutions having a good track record of corporate governance. Companies like Standard Chartered Bank Nepal, Nabil Bank, and Unilever Nepal could be brought in as domestic partners. Nepse has been trying to bring in private investments since 2007. In the FY 2010\11 budget, the government theoretically agreed to privatize Nepse. However, the progress has been very slow. With Sebon now all set to issue a license for the second stock exchange, Nepse has expedited the restructuring process.