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Book Building Process in Nepalese Capital Market-Synopsis: Research | PDF | Initial Public Offering | Corporations
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Book Building Process in Nepalese Capital Market-Synopsis: Research

The document summarizes the book building process for issuing initial public offerings (IPOs) in Nepal's capital market. Under book building, a company determines a price range and collects bids from institutional investors to set a final cut-off price. To issue an IPO through book building, a company must meet minimum criteria like being profitable for 3 years. The process involves determining a price range, collecting bids within that range from institutional investors to set the cut-off price, then issuing shares to the general public and institutional investors.

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Raushan Kumar
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118 views4 pages

Book Building Process in Nepalese Capital Market-Synopsis: Research

The document summarizes the book building process for issuing initial public offerings (IPOs) in Nepal's capital market. Under book building, a company determines a price range and collects bids from institutional investors to set a final cut-off price. To issue an IPO through book building, a company must meet minimum criteria like being profitable for 3 years. The process involves determining a price range, collecting bids within that range from institutional investors to set the cut-off price, then issuing shares to the general public and institutional investors.

Uploaded by

Raushan Kumar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Book Building Process in Nepalese Capital Market- Synopsis

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Issuing IPO through Book Building
What is Book Building ?
Book building is a system for issuing an IPO at a pre-determined price. The process of determination of the price is also known as price
discovery, which is usually done by generating investor’s demand and valuation of the company.

Book Building in Nepal


Securities Exchange Board of Nepal has implemented Book Building Bylaws 2077 that would facilitate the process of floating ordinary shares
for both institutional and general investors.

Minimum Criteria for a company to issue IPO through Book Building system:

• Approval from company’s AGM to issue IPO through the book building
system
• Company should have operated at a profit for the last 3 years
• Net worth per share should be maintained at 150% of per share paid up
capital.
• Average or above average rating from rating agency.

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Process of Issuing IPO through Book Building
Determination of a price range: Issue to General
Determination of Cut-off price: Public:
The concerned company shall
The concerned company shall The general public
initially determine the average
ask at least 10 interested will be able to apply
value of the IPO based on the
institutional investor to submit for minimum 50 units
company’s valuation and the
Obtain approval from company’s their bids. While collecting the at a discount of 10%
demand of the IPO being issued.
AGM for issuance of IPO through bids from institutional investors of the cut-off price.
Also, the company shall prepare
book building system. bids for 100% of the allocated
an initial prospectus and conduct
units eligible for institutional
a roadshow involving the
investors shall be collected.
interested institutional investors
Based on the bids received, the
Once the average value is
cut off price shall be determined.
determined, the concerned
Cut off price shall be the price at
company shall call out to
which the maximum number of
institutional investors to apply
applicants have submitted the
for the shares within the specific
bids within the price range.
price band.

In case the concerned The concerned


The bidding by the
company is not able to collect company can issue
institutional investor is
bids for 100% of the allocated maximum 40% of
done within the price range
units or from at least 10 shares to the
i.e. 20% below (i.e. Floor
institutional institution, then institutional investors
price) or above (i.e. cap
the company shall revise the and 60% to the
price) of the average price
price range and proceed for general public
determined as above.
collecting the bids as earlier. TREY
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For Further Consultation, Please Contact:

S.A.R. Associates,
Chartered Accountants

64 Bishal Basti “Ka”, Bishal Nagar,


Kathmandu, Nepal Disclaimer: The information contained in
this document is compiled by S.A.R. Associates
solely for the purpose of its clients and staffs.
Tel: +977 (1) 442 0807/ 08/ 10
SARA will not be responsible for any decision
Fax: +977 (1) 444 0528
taken on the basis of matters contained herein.

Website: www.sar.com.np

Email: info@sar.com.np

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