What is an IPO in Nepal? A Complete Guide for Investors
If you’ve ever thought about investing in Nepal’s stock market, you’ve likely heard of IPO (Initial Public Offering). IPOs are one of the most popular investment opportunities in Nepal, attracting thousands of new and experienced investors.
But what exactly is an IPO, how does it work, and how can you benefit from it? In this in-depth guide, we’ll break down everything you need to know about IPOs in Nepal—from the basics to expert insights.
1. What is an IPO?
An IPO (Initial Public Offering) is when a private company sells its shares to the public for the first time to raise money. Once an IPO is issued, the company becomes publicly listed on the Nepal Stock Exchange (NEPSE), and its shares can be bought and sold by investors.
Example:
Imagine a hydropower company in Nepal wants to expand its projects but doesn’t have enough funds. To raise money, it decides to issue an IPO, allowing the public to invest in the company by purchasing shares. In return, investors become partial owners of the company.
2. Why Do Companies in Nepal Issue IPOs?
Companies in Nepal issue IPOs for several reasons:
✔ To Raise Capital – IPOs provide companies with funds for expansion, debt repayment, or operational improvements.
✔ To Increase Public Awareness – Going public improves the company’s reputation and attracts more customers.
✔ To Provide an Exit for Early Investors – Founders or initial investors can sell their shares and gain profits.
✔ To Strengthen Market Position – Being publicly listed boosts credibility and trust among stakeholders.
For example, Upper Tamakoshi Hydropower raised billions through its IPO, which helped fund its hydroelectric project.
3. How Does the IPO Process Work in Nepal?
The IPO process in Nepal is regulated by the Securities Board of Nepal (SEBON). Here’s how it works:
Step 1: SEBON Approval
The company submits financial reports, business plans, and other documents to SEBON for approval.
Step 2: IPO Pricing & Issue Plan
The company, along with an issue manager (like NIBL Ace Capital, Global IME Capital), decides:
✔ How many shares to offer
✔ The price per share (usually Rs. 100 per share)
✔ The allotment structure (e.g., general public, employees, and mutual funds)
Step 3: Public Announcement & Application Period
Once SEBON approves, the company announces the IPO via newspapers and platforms like Meroshare. Investors can then apply online.
Step 4: Oversubscription & Allotment
Since most IPOs in Nepal are oversubscribed (more applicants than available shares), a lottery system is used to distribute shares.
Step 5: Listing on NEPSE
After the IPO closes, shares are listed on NEPSE, and trading begins.
4. How to Apply for an IPO in Nepal?
Applying for an IPO is easy if you follow these steps:
Step 1: Open a Demat Account
A Demat account is required to store shares electronically. You can open one at banks or stockbrokers such as NIBL Ace Capital, NIC Asia Capital, Prabhu Capital, etc.
Step 2: Register for Meroshare
Meroshare is an online platform provided by CDSC (Central Depository System and Clearing Ltd.), allowing investors to apply for IPOs.
Step 3: Apply via Meroshare
- Log in to Meroshare
- Go to "My ASBA" section
- Select the IPO you want to apply for
- Enter the number of shares (minimum 10 units)
- Submit and confirm your application
5. Pros and Cons of Investing in IPOs in Nepal
Advantages of IPOs
✅ Affordable Investment – Most IPOs have a base price of Rs. 100 per share, making them accessible to all.
✅ High Potential Returns – Many IPOs double or triple in value after being listed on NEPSE.
✅ Low Risk for Beginners – Since IPO prices are regulated, initial investments are relatively safe.
Risks of IPOs
❌ Oversubscription Issues – Since demand is high, most applicants don’t receive full shares.
❌ Market Uncertainty – Some IPOs may decline in value after listing.
❌ Limited Past Data – Unlike established companies, IPO firms have no prior stock market performance.
For example, Ruru Jalbidhyut IPO saw massive demand and performed well post-listing. However, some microfinance IPOs have struggled.
6. Latest IPO Trends in Nepal
✔ Boom in Hydropower IPOs – Hydropower companies continue to dominate the IPO market.
✔ Growing Public Participation – Over 2 million investors apply for IPOs regularly.
✔ Online Applications on the Rise – Meroshare and digital banking have made IPO investing more convenient.
According to SEBON, Nepal's IPO market has experienced exponential growth, with record-breaking applications in recent years.
7. Should You Invest in an IPO?
Investing in an IPO can be a great opportunity, but you should research the company, industry, and market trends before applying.
If you’re new to investing, start with small amounts, diversify your portfolio, and follow market updates. IPOs can be profitable, but only if chosen wisely.
Would you like to stay updated on Nepal’s latest IPOs? Bookmark this page and follow NEPSE, SEBON, and Meroshare for real-time updates!
Got Questions About IPOs?
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