SEBON Unveils White Paper to Transform Nepal’s IPO Market

The Securities Board of Nepal (SEBON) has released the "White Paper on the Development of Nepal’s Primary Capital Market 2083," outlining a comprehensive strategy to modernize Nepal’s IPO market and align it with international standards over the next decade. The 112-page document identifies key structural challenges—including IPO oversubscription, lottery-based share allocation, inadequate price discovery, and limited institutional participation—and proposes a series of regulatory and technological reforms to address them. One of the paper’s most significant proposals is the gradual transition from the traditional fixed-price IPO model to a Book Building system, allowing share prices to be determined by market demand and a company's financial fundamentals. While fixed-price offerings may continue for smaller companies, larger and mature firms will be encouraged to adopt market-based pricing. SEBON also plans to introduce Qualified Institutional Buyers (QIBs) and Anchor Investors, enabling institutional investors to participate in IPOs before public subscription, improving pricing efficiency and boosting investor confidence through mandatory lock-in provisions. The white paper also emphasizes the creation of a fully end-to-end digital IPO ecosystem, including the implementation of electronic Know Your Customer (e-KYC), integrated investor databases, and a unified IPO platform. In addition, SEBON aims to strengthen market oversight by adopting RegTech and SupTech solutions for real-time monitoring. The regulator has also proposed stricter due diligence requirements and greater accountability for merchant bankers and auditors to improve disclosure quality and protect investors from misleading financial information. The reform agenda will be implemented in three phases over the next five years, beginning with legal and policy reforms, followed by technological modernization and institutional strengthening, and culminating in a fully market-driven IPO framework supported by AI-based market surveillance and broader international investor participation. Through its Primary Market Long-Term Development (PMLD) Vision 2035, SEBON aims to build a transparent, efficient, and globally competitive primary capital market while enhancing investor protection, improving financial literacy, and positioning Nepal’s capital market as a stronger contributor to the country's economic growth.