It has been two months since the Securities Board of Nepal (Sebon) last approved a public offering.
A total of 99 companies are currently seeking Sebon’s approval to issue 1.37bn units of shares to mobilize Rs 80.64bn from the market even as Sebon continues to sit idly by, literally. Of these, 74 applications are for Initial Public Offerings (IPOs), while eight firms have proposed rights issues, four plan to issue debentures, and nine are mutual fund schemes.
Sebon last granted approval on Sept 3 to NMB Bank for its NMB Saral Bachat Fund E mutual fund scheme. Since then, the stock market regulator has not approved a single public issuance. Although the recent festive season, including Dashain, Tihar and Chhath, led to lengthy office closures, merchant bankers say the prolonged suspension cannot be justified merely by holidays. They allege that Sebon has not only withheld new approvals but also stopped accepting new applications since mid-September.
According to one investment banker, a mutual fund had submitted an application for approval on Sept 1, but no further filings have been registered since. “Sebon stopped registering applications altogether. Even rights and bonus share registrations are facing delays,” the banker said. The halt has disrupted expansion plans of several companies, particularly in the hydropower sector, that were preparing to raise capital through public offerings. Officials of Independent Power Producers’ Association of Nepal (IPPAN), the umbrella body of privately-owned hydropower projects, a few months ago alleged that Sebon officials had mobilized middlemen to collect kickbacks for IPO approvals.
Meanwhile, Sebon’s own operations have been paralyzed for 42 days due to an ongoing employee strike. Sebon employees have been on a strike since mid-September against the finance ministry’s instruction for the reduction or elimination of various allowances, facilities and perks that they have legally enjoyed for the past several years.
Interestingly, neither the Sebon nor the ministry has intervened to resolve the stalemate. Market analysts warn that the prolonged freeze is eroding investor confidence and blocking companies’ access to much-needed capital.
