FPO vs IPO in Nepal: what's the difference and should you apply?
An IPO sells at Rs 100. An FPO can cost Rs 157 or Rs 280. Here is why FPOs are priced at a premium, how allotment works, and whether the listing gain is worth it.
An investor I know saw a notice that Himalayan Bank was issuing shares to the public, logged into Mero Share, and went to apply for the usual 10 kitta expecting to pay Rs 1,000. The amount came to Rs 1,570. He assumed it was a glitch and closed the app. It was not a glitch. It was an FPO, and FPOs do not cost Rs 100 a share.
The confusion is everywhere, because the word "issue" gets used for both, and the application flow on Mero Share looks identical. But an IPO and an FPO are different events, priced on completely different logic, with different odds and different upside. Knowing which one you are looking at changes whether it is worth your money.
IPO vs FPO, in one line each
| IPO | FPO | |
|---|---|---|
| What it is | First public share sale | More shares from an already-listed company |
| Typical price | Par value Rs 100 (ordinary) | Premium above Rs 100 |
| Open to | General public | General public |
| Allotment | Lottery if oversubscribed | Lottery if oversubscribed |
| Listing gain | Often large | Usually small |
| Frequency | Common | Rare |
The two rows that matter most are price and listing gain. Everything else they share.
The price is the whole difference
An IPO of ordinary shares is issued at the par value of Rs 100 per unit. The company is unlisted, has no market price yet, and the regulator sets a simple floor.
An FPO is different because the company is already trading. It has a market price, a net worth, and a profit history, so SEBON does not let it sell at Rs 100 when the market values it higher. The FPO price is built from four measures, then averaged (SEBON pricing criteria, via Kathmandu Post):
- Capitalised earnings
- Net worth (book value) per share
- The 180-day average closing market price
- Discounted cash flow
The output is a premium over the Rs 100 par value, written as "par plus premium," but usually a slight discount to the current market price. Nepal Bank's 2018 FPO was priced at Rs 280 when its last traded price was Rs 293 (ShareSansar). That narrow gap is the whole point: an FPO buyer is paying close to market, so the discount is the only built-in margin.
Not every FPO is at a premium. A weaker company can issue at par: Samata Gharelu Laghubitta's 2024 FPO was at Rs 100 (ShareSansar). And to qualify for an FPO at all, a company needs a track record of profit and a net worth per share above its paid-up value, and it can only run another FPO five years after the last one. That eligibility bar is why FPOs are far rarer than IPOs.
Recent FPO examples
The prices tell the story better than any definition.
| Company | Year | FPO price | Why |
|---|---|---|---|
| Himalayan Bank | 2025 | Rs 157 (Rs 57 premium) | Restore 30% public float after the Civil Bank merger |
| Citizens Bank | 2018 | Rs 200 (Rs 100 premium) | Raise capital, public float |
| Nepal Bank | 2018 | Rs 280 (Rs 180 premium) | Raise capital |
| Nepal Life (proposed) | 2016 | Rs 2,951 | Highest premium on record, ~20x net worth |
| Samata Gharelu Laghubitta | 2024 | Rs 100 (at par) | Weaker company, no premium |
Himalayan Bank's 2025 FPO of 9.25 million units at Rs 157 raised about Rs 1.45 billion, and the reason is the most common one for a bank: a merger with Civil Bank had pushed its public shareholding down to 27.01%, below the 30% that the Bank and Financial Institution Act requires, so it had to sell more shares to the public to top the float back up (Fiscal Nepal). That public-float rule is the second big reason FPOs happen, alongside simply raising more capital after listing.
FPO vs right shares: the line people blur
These get mixed up constantly, so keep one test in mind. Right shares go only to existing shareholders, in proportion to what they already hold, usually at par. An FPO goes to the general public, so anyone with a Demat account can apply, usually at a premium. If you have to already own the stock to participate, it is a rights issue. If anyone can apply, it is an FPO. The mechanics and tax of rights, bonus, and dividends are in the right shares vs bonus vs dividend post.
Who can apply, and how you are allotted
Both are open to any Nepali with a Demat account, and both are applied for through C-ASBA on Mero Share. If you have not set up the accounts yet, the buying-your-first-share guide walks the full chain.
Allotment is where another myth dies. When an issue is oversubscribed, allotment is by computerised lottery, not by how much you applied for. Each applicant gets one entry, and most winners receive the minimum units. Citizens Bank's 2018 FPO allotted roughly 74% of valid applicants the minimum 10 units through a lottery (ShareSansar). Applying for 100 units instead of 10 does not improve your odds in the lottery; it only raises the amount blocked while you wait. The same logic governs IPOs, covered in the IPO allotment post.
Should you apply?
Frame it by what each one actually offers, not by hype.
An IPO at Rs 100 is close to a free option in Nepal: the company is usually allowed to list only if it is reasonably valued, and ordinary shares at par tend to open above Rs 100. The constraint is the lottery. Heavy oversubscription means most applicants get 10 kitta or nothing. Kalinchowk Hydropower's 2026 IPO was oversubscribed about 38 times; Bikash Hydropower's 2025 IPO about 8 times. The downside is small and the upside is capped by allotment odds, which is why nearly every eligible investor applies to every IPO.
An FPO is a different bet. You are buying near the market price, so there is no Rs 100-to-Rs 300 listing jump waiting for you. The case for applying rests on the discount to market and your view of the company, the same way buying the share on the secondary market would. If you would not buy the stock at its current market price, a small discount through an FPO is not a reason to. Whatever you buy, the capital gains tax on shares (5% or 7.5% depending on holding period) and the 5% dividend tax apply when you sell or get paid.
What you actually need to know
- Check the price before you apply. An IPO is Rs 100; an FPO is whatever SEBON's formula produced, often a few hundred rupees and occasionally far more. The amount blocked for the same 10 units can differ by 3x or more.
- The IPO listing-gain trade does not transfer to FPOs. An FPO is priced near market, so treat it as a normal decision to buy the stock at a small discount, not as a lottery ticket with guaranteed upside.
- Allotment is a lottery for both. Applying for more units does not raise your odds. It only blocks more cash while you wait for the draw.
Looking at a specific FPO and unsure whether the discount is worth it? Email parjanya57@gmail.com.
This post is part of the Nepal Money Basics guide — the investing section.