Sikles Hydropower’s Lock-In Period to Expire in September

27th August 2025, Kathmandu

The lock-in period for the shares of Sikles Hydropower Limited is set to expire on September 26 (Ashoj 10).

Sikles Hydropower’s Lock-In Period

This event is a significant one for Nepal’s stock market, as it will make nearly 7.38 million shares eligible for trading on the secondary market. The expiry of the lock-in period, which was imposed after the company’s Initial Public Offering (IPO) in 2022, will have a notable impact on the stock’s liquidity and price dynamics.

Understanding the Lock-In Period

A lock-in period is a regulatory restriction imposed by the Securities Board of Nepal (SEBON) to prevent the immediate sale of shares by certain investors following an IPO. The primary goal is to promote market stability, discourage short-term speculation, and align the interests of key stakeholders with the long-term success of the company. In the case of Sikles Hydropower, the lock-in period, as per SEBON’s regulations, is three years from the date of the IPO allotment.

The shares that have been under this restriction belong to:

• Promoters (Founders): 6,500,000 shares
• Local Residents: 850,000 shares
• Employees: 34,500 shares

These shares, which were previously held in a “locked” state, will now become fully tradable on the Nepal Stock Exchange (NEPSE). This sudden influx of a large number of shares into the market is a highly anticipated event that market analysts and investors closely monitor. The expiration of the lock-in period, which is a public event, can lead to a significant increase in trading volume and may result in a shift in the supply and demand equilibrium.

The Impact on the Stock Market

The expiry of the lock-in period for Sikles Hydropower’s shares is expected to have several short-term and long-term effects. For current investors, the immediate concern is the potential for short-term volatility. The sudden release of over 7.3 million shares could create an oversupply, which might exert downward pressure on the stock price. The extent of this price fluctuation will depend on various factors, including the number of shares that are actually sold by the promoters, locals, and employees, as well as the overall market sentiment towards the hydropower sector.

Conversely, for potential investors, this event presents a new investment opportunity. Shares that were previously unavailable will now be accessible for trading. This can attract new buyers, which could, in turn, help stabilize the price. The long-term impact on the share price is likely to be determined by the company’s financial performance, the profitability of its projects, and the general outlook for Nepal’s hydropower industry.

It is worth noting that while the general lock-in period is ending, the company has issued a notice that members of the Board of Directors and senior-level management will remain restricted from buying or selling company shares. This measure is a crucial step in maintaining good corporate governance and preventing potential conflicts of interest. It ensures that those with insider information cannot unfairly benefit from the change in share availability.

The Outlook for Sikles Hydropower and the Hydropower Sector

Sikles Hydropower Limited is an emerging player in Nepal’s energy sector. Its mission is to generate clean and renewable energy to meet the country’s growing electricity demand. The company gained prominence following its IPO in 2022, which attracted thousands of general investors. The stock’s listing on NEPSE has made it a subject of keen interest, as the hydropower sector is widely considered a cornerstone of Nepal’s economic growth.

The end of the lock-in period for Sikles Hydropower’s shares highlights a broader trend in Nepal’s capital market. As more hydropower companies go public and their lock-in periods expire, the market is expected to experience enhanced liquidity and trading activity. For investors, this means a wider range of investment options. For the market as a whole, it signifies a maturing and deepening of the capital market, with a growing number of tradable shares.

However, investors should exercise caution. While the long-term prospects for Nepal’s hydropower sector are generally positive due to the government’s focus on energy development and export, the short-term dynamics caused by lock-in expiry can be unpredictable. The market’s reaction will be a test of confidence in the company’s fundamentals. A strong performance of the stock post-expiry would signal robust investor trust in the company’s management and future profitability.

In conclusion, the expiry of the lock-in period for Sikles Hydropower’s shares is a significant event that will add a large volume of shares to the secondary market. This development will test the supply-demand dynamics of the stock and provide new opportunities for investors. While the long-term outlook for the company remains promising, market participants should carefully analyze the potential for short-term volatility and make informed trading decisions. The event serves as a perfect example of the regulatory framework’s role in shaping market behavior and providing a structured environment for investment.

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