Nepal Stock Exchange (Nepse) planning to raise its capital by issuing public shares. For the purpose, it is planning to seek the government’s approval for demutualization.

Demutualisation is a process of the conversion of a mutual organisation to a public corporation. 

According to Nepse, it has planned to conduct a Due Diligence Audit (DDA) to evaluate its financial position. Nepse Spokesperson Sambhu Pant said the issue price will be known only after the audit.

Nepse’s demutualisation plan is not new. It had also proposed the government for the same earlier. Pant said demutualisation is a global practice to convert a stock exchange into a publicly traded company.

Nepse’s paid-up capital stands at Rs 300 million currently and it plans to raise the capital to Rs 500 million.

Pant hinted at the possibility of raising the capital through “Further Public Offering”. “Out of the Rs 200 million to be raised, Rs 150 million will raised by issuing equity shares to the general people, while the rest will be collected by selling the shares to companies with good governance practices,” he said, adding, however, that the demutualisation would be fruitful only after privatising Nepse.

The government, in the budget for fiscal year 2007-08, had promised to divest government shares in Nepse and bring in the private sector to make it independent and improve its efficiency. And, Nepse has been making efforts for privatisation ever since. The Ministry of Finance and the Nepal Rastra Bank have also asked Nepse to find a strategic partner so the government could divest or transfer its shares. 

Last year, two foreign stock exchange companies—Korea Exchange and Singapore Exchange—had expressed their interests in working as a strategic partner with Nepse. In its proposal, Korea Exchange had sought a 10 percent stake.