76 companies' applications for IPO permission worth 52.48 billion 1.6 million in the Securities Board till Thursday
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The Securities Board of Nepal (Sebon) has requested the Electricity Regulatory Commission not to allow initial public offering (IPO) of hydropower companies with a net worth of less than 90%.
The Securities Board is being strongly protested as it has not given IPO permission for almost two years and the middlemen are asking for commission saying that they will give permission.
In the meeting of the Public Accounts Committee on December 12, 2080, the Securities Board was instructed to issue primary shares (IPO) only to companies with an actual net worth of more than 90% without re-evaluation. The board has not allowed many hydropower companies to bring IPOs saying that the instructions of the audit committee are still in place.
On the other hand, the Securities Board is again in controversy after the promoters of the hydropower company were accused of asking commission for IPO permission. Hydropower promoters have demanded an investigation saying that the board, which has stopped the IPO permission of around 89 companies since 22 months, has mobilized middlemen to collect up to 7 percent commission. The Abuse of Authority Investigation Commission has also started an investigation on this matter. However, the board and the government have not taken this demand seriously.
As of Thursday, 76 companies have applied for IPO permits worth 52.48 billion 1.613 billion rupees in the Securities Board. The largest number of them are 36 companies belonging to the hydropower group. That company has sought permission to issue 17.48 million 42 thousand shares worth 17.89 billion 1.5 million rupees. Among those who applied to the board, there are 5 companies from hotel and tourism, 3 from investment group, 17 from production and processing, 1 from finance company, 3 from microfinance and 10 from other sectors.
According to the Association of Independent Power Producers of Nepal (IPPAN), about three dozen projects with a capacity of 1009.52 MW are awaiting IPO approval. 24 billion 84 crore rupees to be raised from the general public through IPO and rights shares by the electricity company has been stopped due to lack of permission from the board. The promoters have to pay an additional interest of Rs 4.96 billion to the bank, while the cost of the projects has increased to 21.87 billion 29 lakh 33 thousand. They claim that 55 billion 52 million 36 million income has been lost due to the lack of share issue.
On the other hand, the board has stopped the IPO of companies with less than 90 net worth citing the instructions of the Public Accounts Committee. But the promoters say that permission has been stopped for hydropower projects with a net worth higher than that. The Securities Board was without a leader for 11 months after the tenure of the then chairman Ramesh Kumar Hamal ended on 21 December 2080. The approval of the IPO was completely stalled due to the absence of a chairman on the board. Four and a half months after the new UML-Congress coalition government was formed, the government appointed Santosh Narayan Shrestha as the board chairman. Since he became the chairman, 10 companies from different sectors have received permission to issue shares. However, it is alleged that the criteria for allowing and stopping IPOs are not transparent.
