IPOs worth Rs 603 million in the pipeline

Published On: September 5, 2016 08:48 AM NPT By: Republica | @RepublicaNepal

Six companies wait for Sebon nod to issue 6.03 million units of primary shares

KATHMANDU, Sept 4: A total of six companies are in the process of floating 6.03 million units of primary shares to the public.

According to Securities Board of Nepal (Sebon), five hydropower companies have sought permission to issue 5.94 million units of shares, while a microfinance company is in the process of launching its initial public offering (IPO).

Samata Microfinance Bittiya Sanstha Ltd has been awaiting the capital market regulator’s nod to float 94,800 million units of ordinary shares to the public since August 21.

Each share of these companies will be priced at a face value of Rs 100.

Himalayan Power Partner Ltd (1.07 million units), Nepal Hydro Developer Ltd (260,000 units), Akhukhola Jalbidhut Company Ltd (800,000 units) and Chhyangdi Hydropower Ltd (810,000 units) are waiting for Sebon’s approval to launch their IPO.

Hydropower companies have to allocate a certain percent of their shares to locals affected by the project.

Similarly, Arun Kabeli Power Ltd is floating 3 million units of shares worth Rs 300 million to general public.

These six companies aim to draw a total of Rs 603.22 million from the market.

IPOs have been drawing overwhelming subscriptions from investors, irrespective of the quality of their securities. As the share prices of the stocks that investors buy at a face value of Rs 100 in the primary market gets more than doubled in the secondary market, investors are tempted to get hold of these primary shares. The bullish secondary market, which has been climbing to record high levels, have further driven investors toward primary market, according to capital market observers.

Over subscription of Suryodaya Laghubitta Bittiya Sanstha Ltd by as much as 333 times is a recent example of people’s growing attraction toward IPO. Global IME Capital Ltd, the issue manager of the microfinance institution, collected a total of Rs 4 billion while the IPO was for only Rs 12 million including the shares worth Rs 600,000 allotted for mutual funds and Rs 480,000 for the microfinance company’s staff.

A Sebon official said that the stock market regulator was reviewing the applications submitted by these six companies. “While we are reviewing application of some companies, we have sent comments on applications of some other companies. We will issue permission once the process is completed. They can then float their primary shares,” the official added.

The Sebon had approved primary issue worth Rs 8.59 billion in the last fiscal year.