Roberto worked as a research analyst for a stock brokerage company and has been writing about the Nepali stock market since 2013.
Over Rs 20 Billion Worth of IPOs Are in The Pipeline in Nepali Stock Market
Upper Tamakoshi Hydropower Limited floated over Rs 2.63 billion worth of IPO shares two years ago, the largest IPO in the history of Nepal so far. Nepal Reinsurance Company followed last year with a massive Rs 1.60 Billion IPO. In FY2020-21, Nepali stock market witnessed the largest IPO yet—Rs 8 Billion worth initial shares of Nepal Infrastructure Bank.
Dozens other companies are in the review process for floating their initial public shares to the general public, the details of which can be found below. Since investing in IPOs in Nepal (i.e. primary market) is the safest stock investment option, investment in IPOs is a relatively quicker way to get more returns.
Why Is Investing in IPOs in Nepal Considered Safe and Quick?
When IPO shares are allotted and listed in Nepal Stock Exchange (NEPSE), they can be freely traded. As per the provision, the range of the first transaction in NEPSE is within three times the company's book value. For example: if a company's book value per share is Rs 70, it can be traded within Rs 70 to Rs 210 range for the first transaction. If we analyze the history, all stocks begin their first transaction at the "three times" mark. So, one can easily double or triple their money as the IPO shares are sold for Rs 100 in Nepal.
Since the initiation of C-ASBA procedure in applying IPO, the shares will be allotted within 10 days and listed within one month of the issue. This will make it easier for investors to double/triple/quadruple their initial investment with enough knowledge in a very small time period. Further, at least 10 shares are guaranteed for each applicant in IPO. Lottery system will only be used if there are not enough shares to allot every applicant a minimum of 10 shares.
IPOs Coming in Nepal 2021
These public issues have already received approval from the Securities Board of Nepal, or are in the application pipeline in SEBON.
1. Madhya Bhotekoshi Hydropower (for general public)
After the first round of IPO for locals of project-affected region, Madhya Bhotekoshi Hydropower is finally coming up with IPO for all the general public. It is one of the most-awaited issue of the year, since the issue stands at a massive 9 million shares.
Madhya Bhotekoshi Jalavidyut Company in Figures:
- Installed capacity of 102 MW
- Run-off-River (ROR) hydroelectric powerplant in Bhotekoshi river of Sindhupalchowk district
- Required Commercial Operation Date of Nov 30, 2021
- Paid-up capital of Rs 6 Billion after this IPO
- Per MW Cost of Rs 169.73 Million (Rs 16.97 crore)
- Main promoters are Chilime Hydropower Company, Nepal Electricity Authority, Sindhupalchowk Hydropower Company, Sindhu Investment Company.
- Debt funding by Employees Provident Fund
- Issue from Oct 6 - Oct 11, 2021
- Issue Manager: Global IME Capital
- Can apply from MeroShare or from any C-ASBA approved Banks and Financial Institutions all over Nepal
- Minimum quantity to apply: 10 units
- Maximum quantity to apply: 10,000 units
- Per Share Value of Rs100
How lucky have you been so far to be allotted shares of microfinance companies in IPO?
Upcoming IPOs in Nepal
NCell Axiata Limited
Telecommunications Company (NEPSE Sector: Others)
Citizen Life Insurance Company Limited
7.50 million units for Rs 750 Million
Dish Media Network Limited (DishHome)
2.38 million units for Rs 238.59 Million
Reliance Spinning Mills Limited
Manufacturing & Production
1.46 million units via Book-building Method
Sarbottam Cement Limited
Manufacturing & Production
6 million units for Rs 750 per share
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Sahas Urja Limited
Starting September 22, Sahas Urja Limited is coming up with 7 million units IPO shares for the general public. Each share can be applied for Rs 100 each. Applicants can apply for a minimum of 10 units and a maximum of 10.5 million units.
NIBL Ace Capital is the appointed issue manager.
Sahas Urja is constructing a 86MW Run-off-River hydroelectric plant in Solu Khola (Dudhkoshi) in Solukhumbu district. Total investment amount of the project is Rs 11.86 Billion and per MW cost will turn out to be around Rs 130 Million only.
Jeevan Bikas Laghubitta (Microfinance) Bittiya Sanstha
One of the most-anticipated microfinance IPOs in Nepal, Jeevan Bikas Microfinance is floating a total of 1.97 million units shares. The IPO starts from June 25 and ends on June 29, 2021. Prospective applicants can apply from MeroShare or by visiting their C-ASBA approved Banks and Financial Institutions.
Investors are especially looking forward to grabbing these shares because it is set to debut in the trading floors at more than Rs 900 in its first transaction. Its book value per share as per the latest audited report stands at Rs 305.27.
Manakamana Smart Laghubitta (Microfinance) Bittiya Sanstha
Right after the IPO issuance of Jeevan Bikas Laghubitta, another microfinance company will be issuing IPO to the general public. With NMB Capital as the issue manager, the company is issuing 389,000 unit shares to the public at Rs 100 per share.
Since every applicant has a minimum quota of 10 units each, less than 39,000 investors will be allotted the shares of Manakamana Smart Microfinance. The application starts July 1 and ends on July 5, 2021.
CEDB Hydropower Development Company Limited
After being grilled by the Securities Board for 4 years, the regulator has finally granted permission to CEDB Hydropower Dev Co. Ltd. to issue IPO. One reason as to why it got later approval is because it is an investment company (and not a hydropower company) that primarily invests in other hydropower companies. It has equity investments in 5 hydropower projects and earned Rs 76.65 Million in net profit just from receiving dividends and interest incomes from its associate companies.
The company does not have any long term debt obligations, so it seems to be in a comfortable position to distribute dividends from this year itself. After the IPO, its paid-up capital will reach Rs 839.41 Million with the promoters holding 70% of the company. If the prospectus filed with SEBON is to believed, the company will earn around Rs 86.35 Million this year, posting an Earnings Per Share (EPS) of Rs 13.72.
- Issue Size: 2,518,230 units @ Rs 100 per share
- Issue Manager: Sunrise Capital Limited
Ru Ru Jalbidhyut Pariyojana Limited
Ru Ru Hydropower Project Limited came up with IPO with Rs 20 extra premium added. Normally, the shares are issued on par value of Rs 100 per share. But SEBON has granted the company approval to publicly issue shares for Rs 120 per share.
Out of the total 407,706 unit shares, a total of 379,167 units will be issued to the general public. The rest are allocated for staffs of the hydropower company and for the mutual funds.
The company will earn Rs 8.15 Millions in premium from this IPO. The premium earned can be utilized to provide bonus shares i.e. stock dividends. The company has received [ICRANP-IR BBB] credit rating from ICRA Ratings Nepal. This indicates moderate degree of safety with respect to timely payments of financial obligations.
Paid-up Capital (after the IPO)
Rs 407.70 Million
80% promoters - 20% public
Net Profit (projected- FY 2020/21)
Rs 58.52 Million
Book Value per Share (audited - FY 2019/20)
Per MW Cost
Singati Hydro Energy Limited
After issuing 1.45 million units shares for the locals of the project-affected areas in February 2021, Singati Hydro is coming up with further 2.90 million units IPO for the general public. The issue is from March 19 to March 23, 2021 and interest applicants can apply for a minimum of 10 units.
Mega Capital Markets Limited is the issue manager for this IPO. 2% of the shares are reserved for the company's staffs and further 5% are reserved for the mutual funds. The company has received a credit rating of [CARE-NP BB-Is] from CARE Ratings Nepal, which signifies moderate risk of default regarding timely servicing of financial obligations.
About Singati Hydro
Singati Hydro Energy Limited owns and operates a 25MW run-of-river (ROR) hydroelectric plant in Dolakha district. The total investment for the project is assumed to be Rs 5.50 Billion out which Rs 1.45B will be equity investment. After raising Rs 290 Million from this IPO, the paid-up capital of the company will reach Rs 1.45B with promoter shareholders owning 70% of the shares. As per the proposed plan, the plant will have started generating electricity from the current FY 2020-21 and sold to Nepal Electricity Authority, for which it has completed an extensive Power Purchase Agreement.
Nepal Infrastructure Bank
One of the most anticipated IPOs of this year is Nepal Infrastructure Bank. With a massive Rs 8 Billion worth of issue, it will be the biggest IPO recorded in Nepal. Currently, the issue is pending approval from the Securities Board. ICRA rating is also pending.
Chandragiri Hills Limited
To be seen as another stepping stone into welcoming the "real" sectors into the stock market, Chandragiri Hills Ltd. is set to sell its initial shares to the general public. SEBON approved the IPO of Rs 1.84 million units at Rs 100 per share.
For General Public
To be issued from January 8 to January 12, 2021, the company will be issuing 1.5 million IPO shares for the general public.
- Issue Manager: Global IME Capital Limited
- How to Apply: Applications can be made online from MeroShare or via visiting any of the C-ASBA approved Banks and Financial Institutions.
- Credit Rating: [ICRANP-IR] BB (indicates moderate risk of default)
306,819 units were issued to the residents of the project-affected areas where its cable-car service has been installed. This includes permanent residents of:
- Ward No. 3, 4, 6 and 7 (Chandragiri Municipality)
- Ward No. 9 and 10 (Thaha Municipality - Makwanpur)
- Ward No. 5 (Indrasarowar Village Council - Makwanpur)
The IPO for local residents was offered from December 2 to December 16, 2020.
Prabhu Life Insurance Limited
- Issue Size: 6 million units at Rs 100 per share (Rs 600M)
- Issue Manager: Siddhartha Capital Ltd.
- ICRA Rating: [ICRANP-IR] BB+
- Minimum Units To Apply: 10 (Rs 1,000)
- Maximum Units To Apply: 5,000 (Rs 500,000)
- How To Apply: Applications can be made online via MeroShare and from C-ASBA approved Banks and Financial Institutions in the days mentioned above
Some Financials of Prabhu Life Insurance as of 1st Quarter FY2020-21:
- Insurance Fund: Rs 1.19B
- Reserve Fund: Rs 239.17M
- Disaster Fund: 15.44M
- Net Premium Earned: Rs 259.79M (+95.40% yearly growth)
- Total No. of Policies Issued: 22,594 (-191% yearly negative growth)
- Annualized EPS: Rs 8.80 or 8.80% (will probably increase after actuarial valuation)
NRN Infrastructure and Development Limited
A company promoted by a Non-Resident Nepalese (NRN) group with primary objective to invest in infrastructures in Nepal has received approval from SEBON to float its IPO worth Rs 339 million. However, the company has received a below-average credit rating from CARE Ratings Nepal.
- Issue Date: July 31 - Aug 3, 2020
- Issue Size: 3.39 million units @ Rs 100 per share
- Issue Manager: Sanima Capital
- Result and Allotment: On August 11, 2020, the allotment was conducted. Exactly 3,20,614 applicants were allotted each 10 units shares. Rest of the shares were allotted to mutual funds and staffs of the company.
Ajod Insurance Company Limited
Ajod Insurance is a non-life insurance company with an issued capital of Rs 1 Billion. After this IPO, its paid-up capital has reached Rs 1 Billion from Rs 700 Million.
The company is floated a total of 3 million units each valued at Rs 100 per share for a total of Rs 300 Million. After the IPO, general public now hold 30% of the shares while its promoters hold the rest 70%.
The issue was managed by NIBL Capital Markets Limited. Over 540,000 applicants applied for the IPO but only 273,000 were able to get a hold of 10 units shares each.
Sadhana Laghubitta Microfinance
- Issue Date: July 5 - July 8, 2020
- Issue Manager: Global IME Capital Limited
- Minimum units to apply: 10
- Maximum units to apply: 1,000
NIC Asia Laghubitta (Microfinance)
NIC Asia Laghubitta recently floated IPO worth Rs 475.50 million. This amounts to 32.13% of its issued capital. The microfinance company issued a total of 4.755 million unit shares at the paid-up value of Rs 100 per share.
Sanima Capital has been appointed as the issue manager, and it is set to allot the IPO shares on July 4, 2020.
Nepal Re-insurance Company Limited
Nepal Re-insurance Co. Ltd. (NEPSE: NRICL) is issuing a whopping 16 million units ordinary shares to the general public from March 17th to March 20th, 2020. Each unit of share is priced at Rs 100.
The offering was graded IPO Grade 2 by ICRA Nepal, which is the second-best credit rating received by any company in Nepal. Previously, Standard Chartered Bank Nepal had received IPO Grade 2+ for its Further Public Offering (FPO) in 2017. Grade 2 signifies above-average rating.
NRICL posted a net profit after tax of Rs 1.17 billion at the end of FY 2019-20 as per its unaudited report. This amounts to an Earnings Per Share of Rs 14.04 or 14.04%.
With a capital of Rs 56 million, this microfinance company is planning to issue 269,630 units IPO shares to the general public. The shares will be issued at paid-up value of Rs 100. The company will issue shares under the issue management of Sanima Capital from March 10th to March 13th, 2019. If the issue goes under-subscribed during the 4 working days, it will accept applications till April 8th, 2019.
The IPO is being issued at par value of Rs 100 per unit.
Sparsha Laghubitta Bittiya Sanstha has posted a net profit after tax of only Rs 0.1 million until the end of 4th quarter of running fiscal year 2017-18 and has a book value of Rs 100 per share. Post IPO, its paid-up capital will reach Rs 82.96 million and its shares will be first traded in the range of Rs 100 to Rs 300.
Mountain Hydro Nepal Limited
Mountain Hydro Nepal Limited, established as a public company in 2016, is developing a 21.6 MW Lower Hewa Khola Hydropower plant in Panchthar district of Nepal. The company published an offer letter to issue 1,816,110 shares to the general public as its IPO. The IPO received applications from investors from March 7th, 2019 to March 13th. 2019.
The hydro power company raised a total of Rs 181.61 million through this IPO, which the company will use to pay off its bridge gap loans.
Greenlife Hydropower Limited (for project-affected locals)
With a plan to raise Rs 180 million from project-affected people of Dolakha district, Greenlife Hydropower Limited issued 18,00,000 shares in March 2019. The issue could only be subscribed by the residents of Dolakha district.
How to Apply for an IPO in Nepal
When any IPO is approved by the Securities Board, the issue manager (merchant banker appointed to manage the issue of initial public offering shares on behalf of the company) publishes the timeline of the issue in a national daily newspaper. Typically, the IPO application collection duration lasts for 4 days.
Interested applicants must apply for a minimum of 10 shares (i.e. Rs 1,000 at Rs 100 per stock). By visiting any of the ASBA-approved banks in Nepal, one can apply for the IPO. Apart from IPOs, applicants can also apply for Further Public Offerings (FPO) and initial offering of mutual funds in Nepal through ASBA-approved banks and financial institutions.
Online Application System in IPO in Nepal
Applying for an issue can also be made online via a service called MeroShare. MeroShare is a product of CDS & Clearing Limited (CDSC), NEPSE's subsidiary that handles clearing and settlement of shares after they are traded in the secondary market.
The funds are held in your bank account and the money is deducted only if there are shares allotted to you.
Upcoming IPOs in Nepal (2021) - Microfinance Companies
|S.N.||Company||No. of IPO shares||Total IPO Size (Rs.)||IPO Price per Share (Rs.)|
Nesdo Sambridha Laghubitta Bittiya Sanstha Limited
0.828 million units
Rs 82.875 Million
Manushi Laghubitta Bittiya Sanstha Limited
0.393 million units
Rs 39.375 Million
Recent IPOs in Nepal and Their Market Prices
|Company||Last date of IPO issue||Date when the market price hit triple the investment price||Time|
June 27, 2018
August 30, 2018
Upper Tamakoshi Hydropower Limited
November 5, 2018
January 17, 2019
Nepal Sewa Laghubitta Bittiya Sanstha Limited
April 29, 2018
June 14, 2018
Aarambha Microfinance Bittiya Sanstha Limited
March 5, 2018
April 12, 2018
Radhi Bidyut Company Limited
December 21, 2017
June 17, 2018
Support Microfinance Bittiya Sanstha Limited
October 9, 2017
April 3, 2018
Nepal Hydro Developer Limited
August 16, 2017
November 15, 2017
Himalayan Power Partner Limited
June 19, 2017
August 21, 2017
United Modi Hydropower Limited
March 6, 2017
May 30, 2017
Samata Microfinance Bittiya Sanstha Limited
January 6, 2017
June 19, 2017
Chhyangdi Hydropower Limited
June 1, 2017
August 3, 2017
Swadeshi Laghubitta Bittiya Sanstha Limited
April 11, 2017
August 10, 2017
Synergy Power Development Limited
December 28, 2016
May 21, 2017
Forward Community Microfinance Bittiya Sanstha Limited
January 25, 2017
May 21, 2017
Arun Kabeli Power Limited
October 28, 2016
April 16, 2017
Dibyashwari Hydropower Limited
June 30, 2016
February 14, 2017
Khanikhola Hydropower Company Limited
June 1, 2016
January 12, 2017
Mero Microfinance Bittiya Sanstha Limited
March 24, 2016
September 5, 2017
RSDC Laghubitta Bittiya Sanstha Limited
August 24, 2016
February 8, 2017
Average Time it takes to triple an investment in IPO = 4.1 months
(as of February 2020)
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.