SEBON's 2026 IPO reform: what book building and the 50-kitta minimum change for retail

In Asar, a colleague blocked Rs 1,000 for the Sarvottam Paints IPO and then forgot about it, which is the correct way to treat a lottery ticket. Result day came. Nothing. He was one of 28,50,025 valid applicants chasing 7,05,500 units, and 70,550 of them walked away with 10 kitta each. Odds of roughly one in forty. A further 44,207 applications were disqualified outright and never entered the draw.

That draw is the machine SEBON has now written a plan to take apart. A blueprint and a fiscal-year policy landed in Asar, a white paper on 6 August, the Primary Capital Market Reform Policy on 12 August, and two reform task forces in between. The direction is consistent across all of them: away from Rs 100 fixed pricing and the computerised lottery, toward book building, where the smallest application is 50 kitta rather than 10.

Four documents, one direction

Four documents, in this order. On 14 July SEBON published a ten-year Capital Market Development Blueprint and its capital market policy for FY 2083/84, both under chairman Gopal Prasad Bhatta. On 6 August came the Primary Capital Market Development White Paper of Nepal, 2083, the first document in three decades of NEPSE history to deal only with how shares get issued in the first place. The Primary Capital Market Reform Policy, 2083 followed on 12 August, dated 27 Shrawan, and takes effect from the date the board approved it.

The diagnosis comes in the white paper; the binding policy comes after it. That order matters when reading the coverage, which has often reversed the two.

The scale it is aimed at is worth stating plainly. Demat accounts reached 80,11,000 by the end of Asar in FY 2082/83, up from 69,97,000 a year earlier and around 17 lakh in Asar 2077. The white paper puts that at more than 26 percent of the population, with Mero Share accounts past 70,80,000, close to 23 percent. Total approved issuance from FY 2050/51 to Asar 2083 is Rs 7 kharba 65 arba, or Rs 765 billion.

Then the committees. On Shrawan 19, 2083, SEBON formed a seven-member primary market task force chaired by its Regulation Department executive director, with NEPSE, FNCCI and the Merchant Bankers Association on it. Its remit names the pieces retail investors argue about: the book-building process, IPO allotment, digital IPOs, eligibility, pricing, anchor investors. A parallel secondary-market committee is drafting frameworks for margin lending, intraday trading, securities lending and borrowing, and covered short selling, in that order this fiscal year.

What is actually broken

Every share in a standard Nepali IPO is sold at Rs 100. A cement plant with a decade of profits and a hydropower company at first generation both offer their stock at the same number. Price does no work at all, so demand has to be rationed some other way, and the other way is a draw.

The queue behind that system is long. As of 7 June 2026, 104 companies were waiting on SEBON approval to issue 472.89 million units worth Rs 69.30 billion.

Approvals had stalled partly because the regulator went about two months without a chair after the previous chairman resigned on 17 April. SEBON has also said only companies with per-share net worth above Rs 90 stay in the pipeline, a screen adopted after a directive from Parliament's Public Accounts Committee.

On the retail side the arithmetic is unforgiving, and it is the same arithmetic behind hydropower IPOs oversubscribing 38 times. One applicant is one entry regardless of units applied for, with a floor of 10 kitta per winner, so the odds are just winners divided by applicants. The mechanics of the draw are covered in how IPO allotment actually works, and the money side in what ASBA blocks and releases.

Fixed price against book building

The 40 percent institutional and 60 percent public split is set by the 2077 guideline itself. The book-building rules also cap any single institutional bid at 20 percent of the total issue, and oblige underwriters to absorb whatever goes unsold. The cut-off lands at the lowest price that clears maximum demand, so institutions bidding below it get nothing.

The 50-kitta minimum is not a new 2026 rule

This is the claim doing the rounds, usually phrased as SEBON raising the retail minimum from 10 units to 50 in 2026. It is a misreading, and it matters because it makes the reform sound like a barrier being erected this year.

The 50-unit floor applies only to book-built issues, and it has been there since SEBON enforced the Book Building Bylaws of 2077. Sarbottam Cement's issue used it in 2080/81, well before any of the 2026 documents existed. Fixed-price IPOs at Rs 100 par keep their 10-kitta, Rs 1,000 minimum, and every general-public issue running through Mero Share this month is still on that basis.

What the reform changes is frequency. If price discovery becomes the norm rather than the exception, the 50-kitta ticket becomes the ticket most applicants face. The rule is old; the exposure is new.

What Nepal's first book-built issue actually cost

Sarbottam Cement is the only completed data point, and it is instructive. Institutional bidding ran inside a band of Rs 401 to Rs 601.50. The cut-off settled at Rs 401, putting the general public price at Rs 360.90 after the mandatory 10 percent discount.

The Rs 18,045 is straightforward multiplication, not a quoted figure. It is also eighteen times the ticket most Nepali applicants are used to, which is the part the policy documents do not dwell on. A household that could afford a Rs 1,000 punt cannot always afford a Rs 18,045 one.

Did the discovered price fix underpricing? Not really. Sarbottam listed on 18 March 2024 and reached Rs 1,083 within ten trading days, roughly 170 percent above the institutional cut-off and 200 percent above the public price. The gap between issue price and market price survived the switch to book building. It just got harder to buy a seat at.

Seven more companies have since signed with NEPSE to issue through the method: Yeti Brewery, Nepal Tea Development Corporation, Norvic International Hospital and Medical College, Jagdamba Spinning Mills, Times Pharmaceuticals, Laxmi Steels and Purbanchal Lube Oil. None of them are hydropower, which is the point of a mechanism built to bring real-sector firms to market.

The timeline SEBON has set itself

Section 1.7.3 of the white paper sets it out directly.

The stated destination is 2035: a transparent, competitive, market-oriented system with foreign institutional participation. SEBON also proposes scientific valuation standards for IPOs and a reassessment of hydropower eligibility criteria beyond project licensing.

Treat the dates as intent. Nepal's capital market has a long record of policy documents outrunning implementation, and the reform task force had no published deadline for its recommendations at the time of writing.

What changes for you before any of that lands

Nothing this month, and that is worth saying because reform coverage tends to imply otherwise. Your Demat, CRN and Mero Share setup works the same way, described end to end in how to buy your first share on NEPSE. The 10 percent migrant-worker quota is untouched.

Three adjustments are worth making early:

• Keep two budgets, not one. Rs 1,000 for fixed-price issues, and a separate reserve if you intend to bid in book-built ones. A sinking fund handles this better than scrambling when an issue opens with a five-day window.
• Stop treating a book-built application as a lottery ticket. At Rs 18,045 you are taking a position in one company, not buying a scratch card. That calls for reading the financials rather than the ticker, which is what EPS, P/E and book value in a NEPSE context are for.
• Applying for more units still does not improve fixed-price odds. One applicant, one entry. That has not changed, and no part of the reform policy has changed it yet.

What you actually need to know

SEBON has committed on paper to ending fixed Rs 100 pricing, but on a five-year clock, and the documents published so far are policy and diagnosis rather than binding rules. The roughly one-in-forty allotment odds that cost your Asar application nothing are still the live system.

The 50-kitta minimum being reported as a new 2026 restriction is a 2077 rule that only ever applied to book-built issues. The change coming is that book building stops being rare, not that the floor moved.

And the underpricing that makes Nepali IPOs a lottery in the first place did not disappear under book building. Sarbottam's public allottees still saw roughly 200 percent inside ten trading days. Price discovery raised the entry cost from Rs 1,000 to Rs 18,045 without closing the gap, which is the question the reform task force actually has to answer.

If you have applied to a book-built issue and want to compare notes on how the bidding window felt from the retail side, write to me at parjanya57@gmail.com.

This post is part of the Nepal Money Basics guide — the investing section. For how a follow-on offer prices differently from a first issue, see FPO vs IPO in Nepal.