A Guide to Buying Initial Public Offerings(IPO) in Nepal

Initial Public Offerings (IPOs) are a great way for companies to raise capital and for investors to get in on the ground floor of a potentially fast-growing business. In Nepal, the IPO market has seen a surge in interest, with many new investors eager to participate. This guide will walk you through everything you need to know to start buying IPOs in Nepal, from the essential requirements to the application process and beyond.

Essential Requirements

Before you can apply for an IPO, you’ll need to have a few things in place. These are the fundamental building blocks of your investment journey in Nepal.

  • Demat Account: A Demat account is an electronic account that holds your shares and other securities in a dematerialized form. It’s like a bank account for your investments. You can open a Demat account at any of the licensed Depository Participants (DPs), which are typically banks or their subsidiary capital market companies. You’ll need to fill out a form and provide necessary documents like your citizenship certificate and a passport-sized photo.
  • Mero Share: “Mero Share” is an online platform developed by CDS & Clearing Limited (CDSC) that allows you to manage your Demat account and apply for IPOs, FPOs (Further Public Offerings), and rights shares from the comfort of your home. To use Mero Share, you’ll need to register for it through your DP. There’s a small annual fee for this service, typically around NPR 50.
  • C-ASBA and CRN Number: C-ASBA (Centralized Application Supported by Blocked Amount) is a system that allows you to apply for IPOs by blocking the application amount in your bank account. To use this facility, you need to obtain a C-ASBA Registration Number (CRN) from your bank. This number links your bank account to your Demat account, making the application process seamless and secure.

The Application Process (Step-by-Step)

Once you have your Demat account, Mero Share login, and CRN number, you’re ready to apply for an IPO. Here’s how to do it through the Mero Share platform:

  1. Log in to Mero Share: Go to the Mero Share website (meroshare.cdsc.com.np) or use the mobile app and log in with your credentials.
  2. Navigate to ‘My ASBA’: In the main menu, you’ll find a tab called ‘My ASBA’. Click on it.
  3. Select the IPO: You’ll see a list of current and upcoming IPOs. Choose the one you want to apply for and click the ‘Apply’ button.
  4. Fill in the Application Details:
    • Applied Kitta: Enter the number of shares you want to apply for. For most IPOs, the minimum application is for 10 units.
    • Bank: Select the bank account you want to use for the application.
    • CRN Number: Enter your CRN number.
  5. Submit and Confirm: Double-check all the details and click ‘Proceed’. You will then be prompted to enter a 4-digit transaction PIN. After entering the PIN, your application will be submitted.
  6. Monitor Your Application: You can track the status of your application under the ‘Application Report’ section in ‘My ASBA’.

Tips for a Successful Application

  • Apply for the Minimum: In Nepal, IPOs are often oversubscribed, meaning there are more applications than available shares. The allotment is done through a lottery system where each applicant has an equal chance of getting 10 units of shares. Therefore, applying for the minimum number of shares (usually 10) is often the most sensible strategy.
  • Check Your Bank Balance: Ensure you have sufficient funds in your bank account to cover the application amount. The funds will be blocked until the allotment is finalized.
  • Stay Informed: Keep an eye on upcoming IPOs and the financial health of the issuing companies. Websites like Investopaper and Sharesansar provide valuable information and analysis.

What Happens After You Apply? (Allotment and the Lottery)

After the IPO closes, the allotment process begins. Due to the high demand, a lottery system is used to ensure a fair distribution of shares. If your application is successful, you will be allotted 10 units of the company’s shares, and the corresponding amount will be debited from your bank account. If you are not allotted any shares, the blocked amount will be released back into your account.

You can check the IPO result on various websites and through the Mero Share portal. If allotted, the shares will be credited to your Demat account, and you can see them in your Mero Share portfolio.

By following this guide, you’ll be well-equipped to navigate the exciting world of IPOs in Nepal. Happy investing!

5/5 - (1 vote)