KATHMANDU, April 7: The delay in decision-making by SEBON has resulted in a backlog of applications seeking approval for issuing Initial Public Offering (IPOs).
As of Monday, 84 companies have submitted applications to SEBON for approval to issue a total of 387.384 million shares, amounting to Rs 54.34 billion. Since Santosh Narayan Shrestha was appointed as the chairman of SEBON, he has approved IPOs for only a few companies.
SEBON has not yet made decisions on applications submitted in 2079 BS. Among the companies in the IPO approval pipeline, the majority are 43 hydropower companies. Additionally, 16 companies from the production and processing sector have applied to SEBON.
Similarly, 11 companies from other sectors, 7 from the hotel and tourism industry, 3 each from investment and microinsurance and 1 microfinance company have also sought approval for IPO issuance.
However, due to the intervention of the Public Accounts Committee of the House of Representatives, the investigation by the Commission for the Investigation of Abuse of Authority (CIAA) and the objections raised by the Auditor General's office, it has become difficult for Shrestha to grant IPO approvals.
Last year in Poush (mid-December to mid-January), the Public Accounts Committee directed that companies with a net worth of less than 90 should not be granted IPO approval. As SEBON decided to implement the committee's directive in Asar (mid-June to mid-July), companies with low net worth have not received approval. Additionally, the Auditor General's office has raised concerns regarding IPOs with a premium price.
Since taking office as chairman on November 25, Shrestha has granted IPO approval to only five companies including Nepal Micro Insurance, Crest Micro Life Insurance, Om Megashree Pharmaceuticals, Pure Energy Limited and Sanvi Energy Ltd.
The companies that have applied to SEBON want to issue IPOs through methods such as premium pricing and book building, in addition to the face value. SEBON is updating the financial statements of the companies and granting approval only to those whose documents are complete.