Premium IPO Deadlock Forces Companies to Rethink Capital Plans

Kathmandu. The prolonged freeze on premium-priced initial public offerings (IPOs) has begun to reshape corporate fundraising strategies in Nepal, with several companies abandoning premium pricing and opting instead for issue-at-par offerings. The shift comes as the Nepal Securities Board (SEBON) has not granted approval for premium IPOs for nearly two years, leaving dozens of applications stuck in limbo.

Companies that had applied to issue shares above face value say the regulatory uncertainty has made premium pricing impractical. With approvals nowhere in sight, firms are now prioritizing timely access to capital over valuation upside, even if it means raising funds at a lower price. Market participants say this trend reflects growing frustration with regulatory indecision rather than a lack of investor appetite.

A clear example is Hospital for Advanced Medicine and Surgery Limited (HAMS), which had applied more than two years ago to issue 1.125 million shares at a premium price of NPR 288 per share. After failing to receive approval, the company has now moved forward with a revised plan to issue 2.4 million shares at face value of NPR 100, raising NPR 240 million. HAMS had first submitted its premium IPO application on Poush 6, 2080, but the file remains undecided.

HAMS is not alone. According to SEBON data, at least 11 companies currently have applications pending for premium-priced IPOs. None have received approval, effectively putting the premium IPO route on hold. In total, around 85 companies have applied to issue shares worth more than NPR 56 billion, covering nearly 39 million units, but many of these applications have been awaiting clearance for over two years.

The deadlock persists despite earlier political pressure to resolve the issue. In Jestha last year, the then House of Representatives’ Finance Committee directed the regulator to process premium IPO applications in line with existing laws. However, that instruction has yet to be implemented. Instead, SEBON has cited the need to review and potentially amend regulations governing share registration and issuance.

Since assuming office in Mangsir 2081, SEBON Chair Santosh Narayan Shrestha has formed committees to study regulatory changes, but the amendment process itself has not moved forward. Critics argue that this has effectively prolonged uncertainty, discouraging companies from planning premium issues and slowing capital market activity.

The controversy is rooted partly in decisions made during the tenure of former SEBON chair Ramesh Kumar Hamal, who approved a handful of premium IPOs, most notably that of Himalayan Reinsurance Limited on Kartik 1, 2080. That approval drew scrutiny from parliamentary committees and the Office of the Auditor General, triggering broader questions about valuation practices and regulatory discretion.

Following those concerns, approvals for other premium IPO applicants were effectively halted. Hamal himself was questioned by the Commission for the Investigation of Abuse of Authority (CIAA), and audit bodies flagged irregularities in regulatory changes that shortened the eligibility period for premium IPOs from three years to two—changes critics say benefited select companies.

Market analysts note that the fallout has been significant. By freezing premium IPOs without a clear alternative framework, the regulator has created a bottleneck that undermines both investor confidence and corporate fundraising. Companies that could have raised capital at higher valuations are now either delaying expansion plans or settling for par-value issues.

As the stalemate drags on, the broader implication is becoming clearer: unless SEBON provides regulatory clarity—either by reopening premium IPO approvals under strict criteria or finalizing revised rules—more companies are likely to follow HAMS’ path. For Nepal’s capital market, the issue is no longer just about premium pricing, but about predictability, credibility, and the cost of prolonged indecision.