Nepal to allow NRN joint ventures to issue foreign-currency IPOs

Nepal is set to open new avenues for foreign investment by allowing non-resident Nepalis to participate in initial public offerings using foreign currency. The Securities Board of Nepal (SEBON) has amended regulations to permit companies co-owned by the government and non-resident Nepalis to raise up to 85 percent of their capital through public share issues.

Finance Minister Swarnim Wagle announced that the regulatory changes are nearing final approval. He urged the Nepali diaspora to invest in sectors with job creation potential and those that can reduce the country's import dependency, such as tourism, IT, green energy, and high-value agriculture. "Invest with confidence and bring your knowledge, capital, and skills back home," Wagle stated.

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Just a few days ago, we amended the securities allocation and issuance regulations to raise the permissible equity share from the government and the NRN Investment Fund to 85 percent. Invest with confidence and bring your knowledge, capital, and skills back home.

The revised rules are specifically designed to support the NRN Nepal Development Fund, a collective investment vehicle promoted by the Non-Resident Nepali Association (NRNA). This fund aims to pool smaller savings from Nepalis abroad into projects traditionally attracting larger investors. The NRNA has proposed a capital of Rs10 billion for the fund, with the government holding 5 percent, founding promoters 10 percent, and the remaining 85 percent to be raised from non-resident Nepalis via a foreign-currency IPO. This contrasts with existing regulations that generally limit public capital raising to 49 percent.

Hem Raj Sharma, president of the NRNA, highlighted that the fund's establishment will enable the trading of shares directly in foreign currency. He also noted that NRN shareholders will be allowed to trade their equities among themselves. "This decision paves the way for trading shares directly in foreign currency, with NRN shareholders also permitted to trade their equities among fellow diaspora members," Sharma said.

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The fund was established to mobilise a minimum capital of Rs10 billion by bringing small-scale NRN investors under a collective umbrella. This decision paves the way for trading shares directly in foreign currency, with NRN shareholders also permitted to trade their equities among fellow diaspora members.