SEBON Halts Premium IPO Approvals Under New Leadership

The Securities Board of Nepal (SEBON) has not approved any Initial Public Offering (IPO) at a premium price in recent months. Since Santosh Narayan Shrestha was appointed as Chairman on October 2, 2024 (B.S. 2081 Ashoj 2), no company has received approval to issue shares at a premium. Even companies that were already in the regulatory pipeline prior to his appointment have not been granted permission. However, the number of companies applying for premium IPO approvals continues to rise.

The cautious stance follows irregularities observed in premium IPO approvals granted during the tenure of former chairman Ramesh Hamal. Some previously approved premium issues faced objections from the Public Accounts Committee and the Office of the Auditor General. The controversy even led to investigations by parliamentary bodies and the anti-corruption authority, prompting the current leadership to adopt a more conservative approach. Although a study committee was formed following directives from the parliamentary Finance Committee, its findings have yet to be made public.

In the first six months of the current fiscal year, SEBON approved IPOs for 17 companies, all issued strictly at face value of Rs. 100 per share. Similarly, none of the 15 IPOs approved in the previous fiscal year were at a premium. In contrast, during fiscal year 2080/81 under Hamal’s leadership, four out of nine approved IPOs were issued at premium prices, including those of Sonapur Minerals and Oil Limited, Himalayan Reinsurance Limited, and Sarvottam Cement Limited.

Currently, several companies remain in queue seeking approval for premium IPOs. Hulas Finserv Hire Purchase Limited has applied to issue 2.075 million shares at Rs. 358.85 per share. Likewise, Hulas Iron Industries Limited and Hulas Infra Limited have also submitted proposals for premium offerings. Despite growing interest from companies across manufacturing, cement, hydropower, and financial sectors, regulatory approval remains pending.

Market analysts suggest that prolonged suspension of premium IPO approvals could discourage well-established companies from entering the capital market. However, SEBON’s cautious stance signals its focus on transparency and investor protection. The market now awaits policy clarity and the recommendations of the study committee to determine the future of premium IPO approvals in Nepal.