KATHMANDU, July 17: In the previous Fiscal Year (FY) 2024/25, various companies raised over Rs 61 billion from Nepal’s secondary capital market after securing approval from the Securities Board of Nepal (SEBON).
According to SEBON’s records, 14 companies received approval for Initial Public Offerings (IPOs) this year. They issued a total of 38.32 million shares at a face value of Rs 100 each, amounting to Rs 3.83 billion in raised capital.
Additionally, five companies secured capital through Further Public Offerings (FPOs), receiving the green light to raise Rs 1.56 billion by issuing shares on the secondary market.
Several already-listed companies also sought fresh capital by issuing rights shares to their existing shareholders. Altogether, 17 firms were allowed to issue 15.4 million rights shares worth Rs 15.41 billion.
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Even though banks and financial institutions primarily mobilize capital through deposits, nine institutions approached the capital market this year to raise funds through debenture offerings. SEBON approved debenture issuance worth Rs 25.30 billion for these banks and financial institutions.
Similarly, mutual funds topped the chart in terms of the number of approvals. SEBON authorized 20 mutual funds to issue fund units worth a combined Rs 15.20 billion.
In total, SEBON approved capital mobilization worth Rs 61.30 billion from the secondary market this fiscal year.
From a theoretical standpoint, the financial system can operate under either a bank-based or a market-based model. While the former relies on bank lending, the latter represented by the capital market, offers an alternative route for resource mobilization.
For years, secondary market investors have demanded the removal of restrictions on share-backed loans for individual investors. While banks and financial institutions have long served as a major source of investment capital, an increasing number of them are now tapping into the capital market to address liquidity shortages. This year alone, these institutions collectively raised over Rs 25 billion through debentures.
These developments indicate that Nepal's capital market is gradually becoming a more robust platform for capital mobilization. However, this year’s collection fell short of earlier expectations.
One reason for the slower pace was the prolonged absence of a SEBON chairperson, which caused delays in approval processes. This stagnation affected the overall capital-raising momentum, which could not match that of previous years.
Moreover, SEBON became more cautious in granting issuance approvals after the Public Accounts Committee of parliament advised against allowing companies with net worth below 90 to raise capital from the primary market. This directive led to a more selective approach in approving new issues. Despite these hurdles, approval rates have recently picked up pace.
