Hydropower developers push back on SEBON's draft IPO rules as 34 power issues wait in line

Hydropower companies are the largest group of applicants waiting to sell shares to the Nepali public, and they are now arguing with the regulator over the rules that will decide whether they can. Thirty-four hydropower initial public offerings (IPOs) worth Rs 17.2bn, about $111m, were in the pipeline of the Securities Board of Nepal (SEBON) on 6 October 2026, according to its list. That is more applicants than any other sector, though manufacturers seek more money: their 32 applications total Rs 35.7bn, inflated by several cement and steel issues priced at large premiums. All IPO applications together come to Rs 70.6bn.

What the draft says

In September SEBON published a draft directive on general eligibility for public issues, ShareSansar reported. It sets financial and governance tests for companies seeking an IPO, rules on the qualifications of promoters, directors and managers, disclosure standards, and the monitoring of how money raised is spent. The regulator gave stakeholders seven days to comment. The draft is the first item in the finance ministry's capital market action plan, released on 14 September, whose 21 points include sector-specific listing rules for hydropower.

The Independent Power Producers' Association of Nepal (IPPAN) submitted objections on 22 September, The Kathmandu Post reported. Its main complaint is a requirement that a company be in continuous operation before issuing shares. A hydropower project counts as operating only once construction is complete and generation has begun, the association said, yet construction is when it most needs money. IPPAN proposed allowing an IPO once a project reaches about 65% physical progress, according to the Post.

The net-worth test

The second objection concerns a rule that a company's net worth per share must not be below its face value, normally Rs 100. IPPAN told the Post that net worth often falls below Rs 90 during construction because of depreciation, and recovers once electricity sales begin. It claimed that about 60% of hydropower projects could be unable to issue shares if the requirement stays, and asked SEBON to allow IPOs at a net worth as low as Rs 90, with full risk disclosure, underwriting and credit ratings instead.

The pipeline shows how often that threshold already matters. Under the existing guidelines, Rs 90 is already the line that matters: SEBON's list notes that Puwa Khola-One Hydropower reapplied after its net worth per share exceeded Rs 90, and similar notes appear against Annapurna Cable Car and Prabhu Helicopter. Credit ratings are also uneven: CARE Ratings Nepal rated Raghuganga Hydropower, which seeks Rs 1.5bn, at BBB-, indicating moderate credit risk, and Super Hewa Power at BB, indicating moderate risk of default, ShareSansar reported when the two joined the queue in June.

IPPAN also wants SEBON to drop a proposal to set sector-specific debt-to-equity ratios, arguing that a project's financing has already been agreed with its banks. It objected to "fit and proper" tests for founding shareholders, saying a hydropower company can have thousands of them, and asked that companies already in the pipeline be judged under the existing rules, the Post reported. NEPSE Trading also reported the association's objections.

What to watch

SEBON has not said when it will issue the final directive. The key choices are whether it carves out hydropower from the operating and net-worth tests, and whether the 34 applications already filed are grandfathered. For retail investors, who apply in their millions for new issues, the outcome will decide how many such offers reach the market and at what stage of a project's life.