Real sector companies still reluctant to go public - With banks and financial institutions (BFIs) dominating the stock market, investors are finding it difficult to diversify their portfolio and get rid of the risk emanating from concentration of their investments in a certain sector. Most of the public limited companies have been shying away from floating their shares to public largely owing to lack of any tangible benefits and encouragement for being listed in Nepal Stock Exchange (Nepse). Though more than 12,000 public companies are registered with the Office of the Company Registrar (OCR), only 235 companies have issued their shares to general public. Around 86 percent of these companies are from financial sector. Out of 235 listed companies in Nepal Stock Exchange (Nepse) as at mid-November 2014, 201 are banks and financial institutions (including insurance companies) followed by production and processing industries (18), hotels (4), business entities (4), hydropower (6), and other companies (2). Most of the public companies, which have issued public shares, have done so due to regulatory requirements rather than their interest to go public. Nepal Rastra Bank (NRB) and Beema Sansthan (BS) have made it mandatory for the BFIs and insurance companies, respectively, to float at least 30 percent of their shares to the public. It is one of the reasons behind the dominance of financial sector in the country´s only stock market. Shreejesh Ghimire, CEO of NMB Capital, told Republica that existing pricing mechanism is the main reason that is discouraging public companies from issuing public shares. Companies can float IPO only after three years of registering profit at a face valu...
Posted on: Fri, 09 Jan 2015 04:19:23 +0000
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