26th September 2025, Kathmandu
The Nepali stock market is preparing for a notable event as the six-month lock-in period for 72,000 shares of Pure Energy Limited is set to expire on Kartik 11, 2082 (October 28, 2025).
Pure Energy Lock-In Period
These specific shares were allocated to mutual funds during the company’s Initial Public Offering (IPO), and their impending release into the secondary market is a key development that could influence the stock’s trading dynamics. The end of this lock-in period, which is a standard regulatory requirement in Nepal’s capital market, will free up a significant block of shares, allowing the mutual funds that hold them to trade them freely. This event is drawing considerable attention from both retail investors and market analysts who are monitoring the potential impact on the company’s stock price and trading volume. It marks a significant milestone in the company’s journey as a publicly traded entity, as its shares become more widely available for market transactions.
Understanding the Lock-in Period for Mutual Fund Shares
In Nepal, as per the regulations set by the Securities Board of Nepal (SEBON), a portion of the shares issued during an IPO are often reserved for specific groups, including mutual funds. These shares are subject to a mandatory lock-in period, a rule designed to prevent a sudden and massive influx of shares into the market immediately after the IPO. This helps to stabilize the stock’s price and prevent unnecessary volatility. For mutual funds, this period is typically six months from the date of the public allotment. Once this period concludes, as is the case for Pure Energy Limited on Kartik 11, 2082, the mutual funds are no longer restricted from selling their holdings. This release of shares can introduce a new dynamic into the market, as these large institutional investors may choose to either sell their shares to book profits or hold onto them for long-term strategic reasons, a decision that could create either a buying or selling pressure on the stock.
The Potential Market Impact
The expiration of the lock-in period for such a large number of shares, especially those held by institutional investors, can have a noticeable impact on a stock’s performance. The potential effects include:
Increased Liquidity: The release of 72,000 shares will significantly increase the number of shares available for trading in the secondary market, which could lead to higher trading volumes and improved market liquidity.
Price Volatility: The stock’s price may experience short-term fluctuations. If the mutual funds decide to sell a large portion of their holdings at once, it could lead to a temporary oversupply and a potential drop in the price. Conversely, if they decide to hold on to the shares or sell them gradually, the impact may be minimal.
Investor Interest: The event is likely to attract heightened interest from investors, particularly those who have been waiting for a more liquid market to enter. It provides an opportunity for new investors to acquire a stake in the company.
While the lock-in for mutual funds is ending, it is important for investors to remember that other significant portions of Pure Energy Limited’s shares remain under a different, longer lock-in period. According to SEBON guidelines, shares allocated to promoters, project-affected groups, and company employees are subject to a three-year lock-in period. This measure ensures stability in the company’s core ownership and prevents a complete sell-off by insiders, thereby instilling confidence in the company’s long-term prospects. These shares will not be available for trading until their respective lock-in periods have been completed.
A Look at Pure Energy Limited
Pure Energy Limited is a key player in Nepal’s growing renewable energy sector, a sector that is increasingly drawing attention from investors due to its sustainable nature and long-term growth potential. The company’s successful IPO and the subsequent investor interest in its shares reflect a broader national and global trend towards clean energy investments. The expiration of the lock-in period for the mutual fund shares is a sign of the company’s maturing presence in the stock market. As the date approaches, investors are advised to carefully monitor market sentiment, review the company’s recent financial performance, and stay informed about any announcements from the mutual funds holding the shares. The final decision of these funds, whether to sell or hold, will be a key factor in determining the stock’s immediate direction. The event serves as a good reminder of the importance of understanding the different types of lock-in periods and their implications for stock market dynamics.
For More: Pure Energy Lock-In Period