10 Upcoming Initial Public Offerings (IPO) in Nepal

Updated on November 29, 2018
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Roberto is a research analyst for a stock brokerage company in Nepal. He has been writing about the Nepali stock market since 2013.

Over Rs 2 Billion Worth of IPOs Are in the Pipeline

Upper Tamakoshi Hydropower Limited just floated over Rs 2.63 billion worth of IPO shares, the largest IPO in the history of Nepal ever. 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 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 triple their money as the IPO shares are sold for Rs 100 in Nepal.

Since the initial of C-ASBA procedure in applying IPO, the shares will be allotted within 10 days and listed within one month. 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 December 2018

These public issues have already received approval from the Securities Board of Nepal.

1. Chautari Laghubitta

With a capital of Rs 126 million, this microfinance company is planning to issue 540,000 units IPO shares. The shares will be issued at paid-up value of Rs 100. The company will issue shares under the issue management of NIBL Ace Capital from December 5th to 9th, 2018. If the issue goes under-subscribed during the 4 working days, it will accept applications till January 3, 2019.

The IPO is being issued at par value of Rs 100 per unit.

It posted a net profit after tax of Rs 10.26 million at the end of earlier fiscal year 2017/2018.

Micro-finance Companies in Nepal are established to empower rural livelihood by providing micro-credit loans.
Micro-finance Companies in Nepal are established to empower rural livelihood by providing micro-credit loans. | Source

How lucky have you been so far to be allotted shares of microfinance companies in IPO?

Have you been allotted shares of microfinance companies often?

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2. Joshi Hydropower

After more than 0.24 million shares allocated for the locals of its hydropower plant-affected area went unsubscribed, Joshi Hydropower Company is issuing 1.69 million shares for the general public. It received the lowest credit rating i.e. ICRA IPO Grade 5 for its public issue, depicting very poor fundamentals.

Either way, the IPO can be a decent way to earn quick capital gains when sold in the exchange. Siddhartha Capital is the appointed issue manager for the public issue of Joshi Hydropower Company, and will accept applications from December 2nd to December 5th, 2018.

There are more than 20 hydropower companies in Nepal that are also listed in Nepal Stock Exchange. This is the dam-site of Chilime Hydropower, which trades in NEPSE using the ticker symbol CHCL.
There are more than 20 hydropower companies in Nepal that are also listed in Nepal Stock Exchange. This is the dam-site of Chilime Hydropower, which trades in NEPSE using the ticker symbol CHCL. | Source

3. Madhya Bhotekoshi Hydropower Company

As a subsidiary company of Nepal Electricity Authority and Chilime Hydropower, Madhya Bhotekoshi Hydropower Company is issuing a large number of shares to the staffs of its promoter and subsidiary companies. The first phase of the public offering (November 14 – November 30, 2018) is open to members who have provident fund membership at the Employees Provident Fund of Nepal. A total of 11.70 million shares have been allocated for them.

In the second phase of the IPO (December 5 – December 12, 2018), a total of 2.70 million shares will be issued to the staffs of Nepal Electricity Authority, Chilime Hydropower and EPF.

It should be noted that these shares are locked-in and can only be traded 3 years after the hydro company allots shares to the members of general public.

The company is developing 102 MegaWatt Hydropower project in Middle Bhotekoshi river in Sindhupalchowk, Nepal. As per the IPO prospectus released by the company, it will commercially start electricity generation from June 2019. However, the company will start posting profit only after 2 years. As such, investors should consider this IPO as a long-term investment.

Upcoming IPOs in Nepal (2018) - Hydropower, Merchant Bankers & Manufacturing Companies

S.N.
Company
No. of IPO shares
Total IPO amount (Rs.)
IPO Price per share (Rs.)
1
Laughing Buddha Power Limited
9,78,000
9,78,00,000
100
2
Asha Laghubitta Bittiya Sanstha Limited.
600,000
60,000,000
100
3
Garjang Upatyaka Hydropower Limited
200,000
20,000,000
100
4
CBIL Capital Limited
300,000
30,000,000
100
5
Shuvam Power Limited
200,000
20,000,000
100
6
Union Hydropower Limited
633,745
63,374,500
100
7
CEDB Hydro Fund Limited
2,289,300
228,930,000
100
8
Himalaya Urja Bikas Company Limited
990,000
99,000,000
100
9
Shivam Cements Limited
4,400,000
58,058,000
400
10
Swabhimaan Microfinance Bittiya Sanstha Limited
180,000
18,000,000
100
11
CEDB Hydro Fund
2,289,300
228,930,000
100

How to Apply for an IPO

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 50 shares (i.e. Rs 5,000 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 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.

IPO Application Overview (Mero Share)
IPO Application Overview (Mero Share)

Upcoming IPOs in Nepal (2018) - Microfinance Companies

S.N.
Company
No. of IPO shares
Total IPO Amount (Rs.)
IPO Price per Share (Rs.)
1
Sparsha Laghubitta Bittiya Sanstha Limited
240,000
24,000,000
100
2
Asha Microfinance Bittiya Sanstha Limited
165,000
16,500,000
100
3
Janasewi Laghubitta Bittiya Sanstha Limited
420,000
42,000,000
100

How safe, in your opinion, is investment in Initial Public Offerings in Nepal?

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Recent IPOs in Nepal and Their Market Prices

(click column header to sort results)
Company  
Last date of IPO issue  
Date when the market price hit triple the investment price  
Time  
Nadep Microfinance
June 27, 2018
August 30, 2018
2 months
Nepal Sewa Laghubitta Bittiya Sanstha Limited
April 29, 2018
June 14, 2018
1.5 months
Aarambha Microfinance Bittiya Sanstha Limited
March 5, 2018
April 12, 2018
1 month
Radhi Bidyut Company Limited
December 21, 2017
June 17, 2018
6 months
Support Microfinance Bittiya Sanstha Limited
October 9, 2017
April 3, 2018
6 months
Nepal Hydro Developer Limited
August 16, 2017
November 15, 2017
3 months
Himalayan Power Partner Limited
June 19, 2017
August 21, 2017
2 months
United Modi Hydropower Limited
March 6, 2017
May 30, 2017
2.5 months
Samata Microfinance Bittiya Sanstha Limited
January 6, 2017
June 19, 2017
6.5 months
Chhyangdi Hydropower Limited
June 1, 2017
August 3, 2017
2 months
Swadeshi Laghubitta Bittiya Sanstha Limited
April 11, 2017
August 10, 2017
4 months
Synergy Power Development Limited
December 28, 2016
May 21, 2017
5 months
Forward Community Microfinance Bittiya Sanstha Limited
January 25, 2017
May 21, 2017
5 months
Arun Kabeli Power Limited
October 28, 2016
April 16, 2017
5.5 months
Dibyashwari Hydropower Limited
June 30, 2016
February 14, 2017
8 months
Khanikhola Hydropower Company Limited
June 1, 2016
January 12, 2017
6 months
Mero Microfinance Bittiya Sanstha Limited
March 24, 2016
September 5, 2017
5.5 months
RSDC Laghubitta Bittiya Sanstha Limited
August 24, 2016
February 8, 2017
5.5 months
Taking into consideration as Initial Investment amount = Rs 100 and Triple = Rs 300 per share

Median Time = 5 months (as of August 2018)

© 2017 Roberto Eldrum

Comments

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    • profile image

      Lakpa Sherpa 

      12 hours ago

      How to apply ipo share ? Please tell me the Nepali language sir?

    • profile image

      3 months ago

      Ipo reading also

    • profile image

      sk111111 

      14 months ago

      how to apply for promoter shares???

    • profile image

      mahesh 

      16 months ago

      would it possible to provede ipo grading also

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