Nepal's securities market is experiencing a major backlog, with 112 companies waiting for approval from the Securities Board of Nepal (Sebon) to issue initial public offerings (IPOs).
Sebon, the capital market regulator, has not approved any new IPOs for the past six months. It last approved IPOs on April 15 for three companies — Mount Everest Power Development, Sarvottam Paints Industries and Everest Color. All these companies have completed their IPO process.
The 112 companies waiting for the Sebon's nod to go public are seeking to raise a combined Rs 71.29 billion by issuing 496.92 million units of ordinary shares. Some of the applications have been pending since June 2023.
Companies in the Manufacturing and Processing sector alone account for nearly half of the proposed IPOs in terms of value. Thrity-two companies in this sector are seeking to raise Rs 35.71 billion by issuing 174.19 million shares. According to data released by Sebon, eight of these companies have proposed to issue shares at a premium. Maruti Cement has proposed the highest premium of Rs 425 per share, while Jagdamba Steels has the largest proposed issue in the sector, worth Rs 6.62 billion.
Hydropower sector has the largest number of companies in the IPO pipeline. Sebon data show 35 hydropower companies have sought permission to raise Rs 17.78 billion through 174.29 million shares. Siuri Nyadi Power has proposed the largest issue in the sector, worth Rs 3.04 billion.
In the Hotels and Tourism sector, 18 companies are seeking to raise Rs 6.45 billionthrough by issuing 58.21 million shares to the general public. Shree Airlines has proposed the largest issue in the sector, worth Rs 1.26 billion, with a premium of Rs 200 per share. The sector includes companies ranging from cable car to airlines and hotels.
Similarly, nine companies in the Investment sector are seeking to raise a combined Rs 4.48 billion by issuing 32.05 million shares. Among them, Shivam Holdings has proposed the largest issue in the sector. The company plans to raise Rs 2.43 billion from the market through its offering at a premium of Rs 210 per share.
Another 15 companies classified under Otherssector have applied with Sebon to float 51.42 million ordinary shares worth Rs 6.18 billion.Dish Media Network has proposed the largest issue in this category, worth Rs 1.97 billion.
Likewise, three micro insurance companies in the Non-life Insurance sector have also applied to raise a combined Rs 675 million from the market.
The prolonged delay in IPO approvals has kept billions of rupees in potential capital-raising plans tied up as companies wait for regulatory clearance.
Sebon digitizing IPO approval process
Meanwhile, Sebon is preparing to digitize the IPO approval process.
According to the capital market regulator, preparations are underway too handle all work related to IPO approvals digitally.
Sebon is preparing to implement a Standard Operating Procedure (SOP) to make the IPO approval process automated and transparent. Once the SOP is implemented, applications seeking IPO approval will automatically move through the process.
Currently, companies must submit their IPO applications to Sebon through merchant bankers. Only after the submission does the process of updating information, adding missing documents and reviewing financial statements begin.
Sebon officials claim that the approval process will move automatically once the new system is implemented.
