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NEA to issue IPO

NEA will issue the biggest IPO in Nepalese Share Market. NEA has been generating profit for many years. Though the investors are not interested in Hydro sector, How successful will this IPO be??


Nepal Electricity Authority (NEA) is issuing the biggest IPO in Nepalese Share Market History. NEA announced in their press release hosted by Kul Man Ghising - CEO of Nepal Electricity Authority. In the press meet Director Ghising stated that 25% of the Working Capital would be issued to the Public and the procedures were on its way. NEA was issuing the share for the public for the involvement of Public in the Organization along with the creation of the feeling of belonging towards the Organization.
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The Public's involvement in the organization to some extent would guide the organization towards prosperity in the future as well. This would also lead to transparency in financial along with the governance of the Organization which would lead to the prosperity of the organization which has been generating profits recently which was in loss some years ago.

According to the decision from the Cabinet of Ministers and allying with NEA's financial provision for restructuring the Organization the proposal of issuing 25% IPO to public has been forwarded. It's been 3 years since Ghising took the responsibility of CEO of NEA which has the total capital of 1 Kharba 20 Arab Nepalese Rupees. When he took over his duty, Nepalese were facing 8 Hours of Loadshedding during the Monsoon as well. During the winter season  the loadshedding had peaked to 18 hours. He is known for eradicating loadshedding in Nepal. After that he brought the NEA into profit which was into loss for many years.

The IPO will be the biggest in Nepalese Share Market and he emphasized the priority would be given to big Corporate/Business houses as the shares related to Hydro power sector has not been able to attract a lot of investors. Along with big corporate houses the public IPO will be issued to the public as well. Energy Minister Barsa Man Pun had also stated earlier as People will be motivated to invest in Nepal Electricity Authority as Nepal Tetlecom. Public participation would make the Organization competent to face the upcoming challenges.

Any company which wants to issue an IPO should be in profit for two fiscal years and the General Reserve shouldn't be negative. Though NEA is in profit for 3 years their General Reserve is a subject of consideration and Nepal Government will play part so that the IPO could be issued. NEA has not made decisions on whether the shares would be issued in premium or at Par value. NEA is the sole company which buys electricity from different companies and is a sole distributor of electricity in Nepal enjoying Monopoly market.

There are pros and cons of buying Government owned companies and the recent performance of Nepal Telecom demonstrates the present situation. The hydro sector is not well accepted among investors. How will the public respond to this IPO?

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