After a prolonged period of regulatory uncertainty and internal discord, Nepal’s primary capital market has begun to regain momentum, with the Securities Board of Nepal (SEBON) approving initial public offerings (IPOs) for 12 companies within just five months. The development signals a notable shift in regulatory activity following the appointment of new leadership at the market watchdog.

SEBON had remained without a chairperson since Poush 2080 (January 2024), a vacuum that stalled policy decisions and slowed approvals across the primary market. The situation began to change in Mangsir 2081 (November 2024) after Santosh Narayan Shrestha assumed office as chairperson. Since then, long-pending files have started moving, injecting fresh optimism into Nepal’s stock market and offering relief to dozens of companies seeking to raise capital from the public.

The renewed pace is evident in approval numbers. In fiscal year 2020/21, only nine companies were granted permission to issue IPOs. In FY 2021/22, approvals increased modestly to 15 companies. However, in the first five months of FY 2022/23 alone - up to Poush 20 - SEBON has already cleared 12 companies, indicating a more proactive regulatory stance.

So far, SEBON has approved the issuance of shares worth Rs 25.34 billion, equivalent to 253.42 million shares, across companies from diverse sectors. Hydropower continues to dominate the pipeline, with five hydropower companies receiving approval. Four companies are from the manufacturing and processing sector, while one development bank and one hotel and tourism company have also been cleared to go public.

Some of these companies have already entered the secondary market. Sagar Distillery Limited from the manufacturing sector has completed its IPO and commenced trading, with shares worth Rs 720 million now listed on the Nepal Stock Exchange (NEPSE). Similarly, Shrinagar Agritech Industries has also concluded its IPO process and begun secondary market trading.

Other companies that have either issued shares or are in advanced stages of capital mobilization include SY Panel Nepal Limited, Solu Hydropower Limited, Salpa Development Bank Limited, Bhujung Hydropower Limited, Ridge Line Energy Limited, Suryakund Hydroelectric, Super Khudi Hydropower, Palpa Cement Industries, and Shikhar Power Development. Collectively, capital mobilization of more than Rs 25 billion from these issuances is expected to support liquidity flow in the economy and expand domestic investment opportunities.

SEBON’s recent approvals are not limited to ordinary shares. The board has also cleared follow-on public offerings (FPOs) and hybrid financial instruments. Vijay Laghubitta Bittiya Sanstha Limited, for instance, has received approval to issue 466,817 shares through an FPO, marking another step toward capital strengthening within the microfinance sector.

A significant recent development in Nepal’s financial market is the introduction of non-redeemable, non-cumulative preference shares (PNCPS), a hybrid instrument aimed at bolstering banks’ capital adequacy. Within the last five months, SEBON has approved such issuances for four banks - Nabil Bank, Kamana Sewa Development Bank, NMB Bank, and Siddhartha Bank.

Nabil Bank became the first to receive approval, clearing the issuance of 50 million units of preference shares at a face value of Rs 100 each, totaling Rs 5 billion. Kamana Sewa Development Bank has been approved for Rs 3.5 billion, NMB Bank for Rs 3 billion, and Siddhartha Bank for Rs 3.5 billion worth of similar hybrid instruments. Regulators and market participants view these instruments as critical for strengthening banks’ capital base without diluting ordinary shareholders excessively.

Despite the recent acceleration, a substantial backlog remains. As of Poush 24, a total of 85 companies are still awaiting SEBON approval to issue shares worth Rs 55.06 billion, equivalent to 385.73 million shares.

Sector-wise, the pipeline includes 37 hydropower companies, 22 manufacturing and processing firms, nine hotel and tourism companies, three microinsurance firms, four investment companies, and 11 companies from other sectors. The large number of pending applications underscores both the growing appetite for public fundraising and the continued pressure on the regulator to maintain momentum, transparency, and policy clarity in Nepal’s capital market.