Savings and Investments are the two important things that you need to stay financially stable. Today both investment and savings are the platforms where you get to earn more than what you give. Isn’t that a good deal? That’s why we all look for investment opportunities to make and save collected amounts for future purposes.
If you are interested in investing and are always aware of avant-garde tech, then you already have heard of Initial Public offerings or IPOs. For many startup companies, IPOs are valuable, but what exactly are they?
Shockingly, new investors in Nepal are increasing, and the growing popularity got them see numerous IPOs. Though many expert investors know about IPOs and related terms, few of them are clueless about what IPOs are, how it works and their benefits?
So, continue reading the article to understand IPOs in detail.
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A Brief Description of IPO
IPO is an acronym for Initial Public Offering, and many people are curious to go in-depth to know the meaning of IPO. So let’s start with the definition of IPO. IPO means an offering where private companies go public by issuing shares to the public for investments and trading purposes. In exchange, companies get money from the IPO subscribers. Generally, IPOs are two common types of IPOs:
- A fixed-price offer
- Book building offer
Companies can make use of both types of shares either separately or combined. But when and why do private companies offer IPOs to the public? Well, companies go public by selling IPOs mainly for two reasons:
- When a company requires vast amounts of money for its growth.
- To sustain liquidity to their existing shareholders( promoters and founders)
In addition, it can expand visibility in the country, acquire a reputation in public and affirm assets in the market.
Benefits of investing in IPOs in Nepal
Buy cheap, earn big
Companies planning to go for IPOs initiate the process by offering at a discounted price. The primary benefit of an IPO is that it appears at the lowest price and that it has the potential to grow big within a short period. The stock prices may increase when listing itself, resulting in extracting huge profits within a short time.
Transparent pricing
Public or shareholders will have transparency of the price just like big investors. You will be able to view the pricing of the securities in order. So, the whole process is transparent, and the pricing of shares will fluctuate depending upon the changing market conditions.
Long term goal
Just like an equity investment, IPOs can give you a lot of profits in the long run. By that, you can fulfill your long-term goals and needs. The Nepali IPO market is growing.
Are IPOs popular in Nepal?
The answer is “YES,” as IPO is a popular trend and emerging investment practice in Nepal, especially among the youngsters. Back then, there was a time when people were unaware of IPOs and their benefits. While few active investors were present, most lost their interest in the stock market due to the hassle of processing, documentation and long queues. The process was complicated and time-consuming.
The Nepalese economy got severely hit by the emergence of the COVID-19 pandemic. Despite the pandemic, the country’s stock market observed exponential growth with the increment in numbers of new investors, especially the country’s young population. Also, the adoption of online trading flourished during the lockdown. In the F/Y 2020/21, the total turnover increased by 812 percent from Rs. 135 billion to Rs. 1.2 trillion.
Today IPOs are considered the most profitable and huge revenues generating investment resulting in their increment in popularity and demand by the public itself. With the increasing financial literacy and increment in remittance inflow in Nepal, the active number of traders seems optimistic and has the potential to grow further. Knowing the abounding profit of IPOs today, people involve their whole families in the stock market. Even educational institutions educate them about IPOs to encourage them to invest in trade stocks.
Hence, the Stock market is the best place to earn more money with less investment; that is why IPOs are in trend and popular among Nepalese. With that, the number of companies applying for IPO listing has also increased with the approval.
How to buy IPO stock in Nepal?
IPOs are announced now and then in Nepal. Despite a busy schedule, people rush to visit banks or brokers, standing in line for hours to apply for an IPO. Today while every business has digitized, IPOs have gone digital. The digital practices have made it easy to use and quickly receive shares from smartphones, tablets or laptops. You will be required to open other related accounts to facilitate yourself with such modern facilities.
The prerequisites
- Personal Bank Account
- Demat Account
- CRN Number (verification code that connects bank account with Mero share.
- Mero share account.
The process
Here let’s list out the process to apply for IPO;
- Once the announcement, look at the opening and closing date of the IPO.
- Decide how much you prefer to buy or invest in an IPO.
- Then go to the Mero share website and fill the ASBA with the required details.
- Submit the form.
Your amount gets held until the allotment date. But if you luckily get allocated, the bank will transfer your balance from your bank account to the company’s account. And, if you don’t get allocated, the amount gets released.
What to consider before investing in IPOs in Nepal?
The IPOs trend is booming in Nepal, and every individual never misses the chance to catch current IPOs. Everyone gets excited whenever the announcement is published. Now comes the question, how do you prefer to apply for the IPO? It depends upon your convenience as you can visit nearby banks or broker branches but for safe, reliable, quick and instant online processing, go with smartphones. As there are many IPOs to look for in the upcoming days, we suggest investors consider the important factors before investing in an IPO.
- Identify the right IPO to invest in.
- Reasons behind raising the fund by a particular company.
- Analyze the management, promoter background, strength and weakness of the company.
- Valuation and health of the company
- The perspective of a company in the market.
Your IPO journey with NIC ASIA Bank
Now that you know about IPOs choosing the medium to apply for IPO is your discretion. While many options are available, choosing the right place for safe investment can be challenging for you. However, considering safe, happy, prompt and reliable investing, we urge you to get the overall IPO-related service, including a complete digital banking solution here at NIC ASIA Bank. While digital banking in Nepal is flourishing, NIC ASIA Bank aims to become a “Digital First Bank” so that modern customers can receive excellent professional assistance. For that, today, NIC ASIA Bank has become the public’s first choice and has been given the tag as the no.1 bank in Nepal.
Also, NIC ASIA Bank provides the easiest way to clients when it comes to applying for IPO through its MoBank App. Customers now can directly apply IPOs without remembering the CRN no. and DEMAT number via NIC ASIA MOBANK. In fact, customers don’t need to mug up the Demat number or CRN number, which means there will be no need to look at the screen and your paper to manually enter the CRN number, Convenient and fast, isn’t it? Moreover, we serve clients with remarkable and excellent services in other aspects too and make them feel valued. So, this is what makes NIC ASIA Bank the best bank in Nepal so far.
What about the DEMAT Account and CRN number?
Also, if you are a beginner in the stock market and wish to start your IPO journey effortlessly, register for an online DEMAT account from NIC ASIA Bank, where you can sign up within 60 seconds.
Apply for DEMAT and Apply for Meroshare and CRN number
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