20th May 2025, Kathmandu
The Securities Board of Nepal (SEBON) has removed 14 companies from its IPO pipeline. This move affects both hydropower and other sectors. SEBON made this decision public on Monday. The removal happens because these companies did not meet financial requirements.
SEBON Delists 14 IPO Companies
List of Companies Removed
Among the removed companies, some are well-known in various industries. The list includes:
Accord Pharmaceuticals
Apex Hospitality
Annapurna Cable Car
Orchid Holdings
Prabhu Helicopter
Kantipur Television
Besides these, seven hydropower companies were also removed:
Laughing Buddha Power Nepal
Yambaling Hydropower
Unique Hydropower
Beni Hydropower
Puwakhola One Hydropower
Sanima Hydropower
Richet Hydropower
Reason for Removal: Low Net Worth and Short PPA Duration
The main reason for removal is that 13 of these companies have a per-share net worth below NPR 90. SEBON requires a minimum net worth of NPR 90 per share to qualify for IPO approval. These companies must improve their financial status before reapplying.
One hydropower company was removed because its Power Purchase Agreement (PPA) has only five years left. SEBON considers the remaining PPA duration important. Projects with a short PPA period may not guarantee long-term returns for investors.
A SEBON spokesperson said, “Companies below the NPR 90 net worth cannot get IPO approval now. They can apply again after meeting the financial standard.”
SEBON Follows Regulatory Instructions
This decision follows instructions from the Parliamentary Public Accounts Committee. The committee directed SEBON not to approve IPOs for companies with a net worth below NPR 90. SEBON is enforcing this rule strictly to protect investors.
SEBON aims to ensure transparency in the capital market. It also wants to maintain financial discipline among companies seeking public investment. The board prioritizes protecting small investors.
Reaction from the Hydropower Sector
Hydropower promoters have criticized the board’s move. Some have accused SEBON leadership of bias and unfair delays. However, SEBON officials deny any connection between these accusations and their decision. They stress that the removal is purely based on regulatory compliance.
The board’s source said, “Our decision focuses on company eligibility. It is not influenced by outside pressures or accusations.”
What Companies Must Do Next
The removed companies now face several challenges. They need to increase their net worth above NPR 90 per share. They must also provide updated financial reports to SEBON.
Hydropower firms must review their PPA agreements. If their project agreements meet the board’s requirements, they can seek re-entry into the IPO pipeline.
SEBON will only consider new applications from these companies after they meet all criteria.
Importance of IPO Eligibility Standards
Maintaining strict eligibility standards is crucial for the Nepalese stock market. It builds investor confidence. It also reduces risks linked to weak or unstable companies entering the market.
SEBON’s decision reflects a broader effort to improve Nepal’s capital market environment. It ensures that only financially healthy companies raise funds from the public.
Protecting Small Investors
One of SEBON’s key goals is to protect retail investors. Many individual investors rely on IPOs for wealth growth. Allowing companies with poor financial health to go public can cause losses for these investors.
By removing companies with a net worth below the threshold, SEBON shields investors from risky investments. This step encourages better governance and accountability among companies.
Market Transparency and Financial Health
SEBON also focuses on transparency in the capital market. Clear rules help companies prepare better before going public. Investors can trust the listed companies more.
Financial health checks are part of this transparency drive. Companies with strong net worth are more likely to succeed after IPO. This benefits the overall economy.
Background of the IPO Pipeline System
The IPO pipeline is a process where companies apply for permission to sell shares publicly. SEBON reviews applications and checks if companies meet legal and financial standards.
Only companies that fulfill these requirements get IPO approval. Others are asked to improve or are removed from the process.
This pipeline system protects the stock market from unstable listings.
Conclusion: A Step Toward Market Stability
SEBON’s removal of 14 companies from the IPO pipeline shows its commitment to market stability. It follows government and parliamentary rules strictly.
Affected companies now must strengthen their financial positions. They must meet SEBON’s net worth and project agreement requirements to rejoin the IPO process.
This move aims to protect investors, improve market transparency, and support Nepal’s capital market growth.
For more: SEBON Delists 14 IPO Companies