SEBON faces backlog as IPO approvals stall amid investigations
KATHMANDU: The Nepal Securities Board (SEBON) is grappling with a mounting pile of Initial Public Offering (IPO) applications, as delays in decision-making have left companies in limbo. Since Santosh Narayan Shrestha assumed the role of SEBON Chairman in late November 2024, only a handful of IPO approvals have moved forward, drawing criticism from market stakeholders.
A staggering 84 companies have submitted applications to issue 387.38 million shares worth NPR 54.34 billion, yet most remain stuck in the pipeline. Among them, 43 hydropower firms lead the list, followed by 16 manufacturing and processing companies, 11 from miscellaneous sectors, seven from hospitality and tourism, three each from investment and micro-insurance, and one from microfinance. Applications dating back to 2022 remain unresolved, exacerbating the backlog.
Shrestha’s tenure has been marred by external pressures, including interventions from the Public Accounts Committee of the House of Representatives, an ongoing probe by the Commission for Investigation of Abuse of Authority (CIAA), and concerns raised by the Auditor General’s Office. These factors have reportedly paralyzed SEBON’s ability to greenlight IPOs, particularly those at premium prices. Last December, the Public Accounts Committee directed SEBON to withhold approvals for companies with a net worth below 90, a decision SEBON formalized in June 2024, effectively stalling many applications. The Auditor General has also questioned the legitimacy of premium-priced IPOs, adding to the regulatory gridlock.
The shadow of past controversies looms large. Shrestha’s predecessor, Ramesh Kumar Hamal, is under CIAA scrutiny for allegedly favoring companies with IPO approvals, a matter now being investigated by a parliamentary task force. “With multiple agencies probing past premium-priced IPOs, immediate approvals are off the table until these investigations conclude,” a SEBON source revealed.
To date, Shrestha has approved IPOs for only five companies: Nepal Micro Insurance, Crest Micro Life, Om Megashree Pharmaceuticals, Pure Energy, and Sanbhi Energy. Meanwhile, companies seeking to issue IPOs at face value, premium rates, or through book-building methods—like Reliance Spinning Mills, which sparked controversy last June over alleged financial manipulation—face continued delays. SEBON claims it is updating financial statements and processing applications with complete documentation, but spokesperson Niranjan Ghimire’s assurances ring hollow to frustrated applicants.
The logjam threatens Nepal’s capital market, with billions in potential investment hanging in the balance as SEBON navigates a web of oversight and caution.
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