When a company goes public, it issues an initial public offering (IPO), which allows it to raise money by selling shares. All shareholders can’t sell their shares immediately after the IPO. Here is where the concept of a lock-in (IPO LockUp Period) period comes into play.
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What is an IPO lock-in period, and how does it work?
A lock-in period, a common practice in investment landscapes worldwide, denotes a stipulated duration during which investors are prohibited from selling, transferring, or disposing of their shares or assets in a company or investment. In Nepal, this regulatory measure applies specifically to sectors like hydro, investment, manufacturing & processing, and hotels following the initial public offering (IPO) allotment to the general public.
Nepal’s lock-in period usually lasts three years following an IPO.
Sector-wise Overview of Lock-in Period in Nepal
- Hydro and Manufacturing & Processing Sector
During the 3-year lock-in period, the unit shares held by project-affected locals and promoters in the hydro and manufacturing & processing sectors are bound. This restriction ensures stability and aligns the interests of key stakeholders with the long-term success of the enterprise.
- Investment and Hotel Sector
In the investment and hotel sector, where no reservation is made for locals during IPO issuance, only promoter shareholdings are locked in. This measure protects against rapid share sell-offs, promoting sustained growth.
We have compiled a list of Hydropower companies in Nepal with their Lock In Period and Ending date.
list of Companies from Nepal with their Lock-in Period with Ending Date
|Lock-in End Date
|Lock-in Period of Asian Hydropower Limited
|Lock-in Period of Arun Valley Hydropower Development Company Limited
|Lock-in Period of Ankhukhola Hydropower Company Limited
|Lock-in Period of Arun Kabeli Power Limited
|Lock-in Period of Api Power Company Limited
|Lock-in Period of Barun Hydropower Company Limited
|Lock-in Period of Bindhyabasini Hydropower Development Company Limited
|Lock-in Period of Balephi Hydropower Limited
|Lock-in Period of Barahi Hydropower Public Limited
|Lock-in Period of Buddha Bhumi Nepal Hydropower Company Limited
|Lock-in Period of Butwal Power Company Limited
|Lock-in Period of Chilime Hydro power Company Limited
|Lock-in Period of Chhyangdi Hydropower Company Limited
|Lock-in Period of Dibyashwari Hydropower Company Limited
|Lock-in Period of Dordi Khola Hydropower Company Limited
|Lock-in Period of Eastern Hydropower Limited
|Lock-in Period of Ghalemdi Hydro Limited
|Lock-in Period of Greenlife Hydropower Limited
|Lock-in Period of Green Ventures Limited
|Lock-in Period of Himal Dolakha Hydropower Company Limited
|Lock-in Period of Himalayan Hydropower Limited
|Lock-in Period of Himalayan Power Partner Limited
|Lock-in Period of Himalaya Urja Bikas Company Limited
|Lock-in Period of Joshi Hydropower Development Company Limited
|Lock-in Period of Khani Khola Hydropower Company Limited
|Lock-in Period of Kalika Power Company Limited
|Lock-in Period of Liberty Energy Company Limited
|Lock-in Period of Madhya Bhotekoshi Jalavidyut Company Limited
|Lock-in Period of Mountain Energy Nepal Limited
|Lock-in Period of Molung Hydropower Company Limited
|Lock-in Period of Mandakini Hydropower Limited
|Lock-in Period of Mountain Hydro Nepal Limited
|Lock-in Period of Maya Khola Hydropower Company Limited
|Lock-in Period of Mailung Khola Jal Vidhyut Company Limited
|Lock-in Period of Ngadi Group Power Limited
|Lock-in Period of Nepal Hydro Developer Limited
|Lock-in Period of National Hydro Power Company Limited
|Lock-in Period of Nyadi Hydropower Limited
|Lock-in Period of Peoples Hydropower Company Limited
|Lock-in Period of Panchakanya Mai Hydropower Limited
|Lock-in Period of Panchthar Power Company Limited
|Lock-in Period of People's Power Limited
|Lock-in Period of Radhi Bidyut Company Limited
|Lock-in Period of River Falls Power Limited
|Lock-in Period of Rapti Hydro & General Construction Limited
|Lock-in Period of Rasuwagadhi Hydropower Company Limited
|Lock-in Period of Ridi Power Company Limited
|Lock-in Period of Ru Ru Jalbidhyut Pariyojana Limited
|Lock-in Period of Sahas Urja Limited
|Lock-in Period of Swet-Ganga Hydropower & Construction Limited
|Lock-in Period of Singati Hydro Energy Limited
|Lock-in Period of Sanima Mai Hydropower Limited
|Lock-in Period of Sikles Hydropower Limited
|Lock-in Period of Sanjen Jalavidhyut Company Limited
|Lock-in Period of Supermai Hydropower Limited
|Lock-in Period of Super Madi Hydropower Limited
|Lock-in Period of Sagarmatha Jalbidhyut Company Limited
|Lock-in Period of Samling Power Company Limited
|Lock-in Period of Synergy Power Development Limited
|Lock-in Period of Sayapatri Hydropower Limited
|Lock-in Period of Shuvam Power Limited
|Lock-in Period of Shiva Shree Hydropower Limited
|Lock-in Period of Sanima Middle Tamor Hydropower Limited
|Lock-in Period of Terhathum Power Company Limited
|Lock-in Period of Upper Hewakhola Hydropower Company Limited
|Lock-in Period of United Modi Hydropower Limited
|Lock-in Period of United Idi-Mardi and R.B. Hydropower Limited
|Lock-in Period of Union Hydropower Limited
|Lock-in Period of Universal Power Company Limited
|Lock-in Period of Upper Tamakoshi Hydropower Limited
|Lock-in Period of Upper Solu Hydro Electric Company Limited
|Lock-in Period of Bhagawati Hydropower Development Company
|Lock-in Period of Manakamana Engineering Hydropower
|Lock-in Period of Upper Lohore Khola Hydropower Company
|Lock-in Period of Mandu Hydropower Limited
The importance of an IPO lock-in period for maintaining market stability
The IPO lock-in period is intended to stabilize the shares’ market price. Maintaining market stability and stock prices is possible by preventing major shareholders from selling too soon after the IPO. New companies may find this important since they may be more volatile.
Understanding the expiration of an IPO lock-up period and its impact on stock prices
When the IPO lock-in period expires, insiders and significant shareholders can sell their shares, resulting in a more volatile stock price. If shares are sold as soon as lock in period is finished, the stock price may go down. But, if insiders keep their shares, it can be interpreted as a vote of confidence in the business and could raise the stock price.
It is uncommon for IPO lock-in periods to be extended or shortened. Still, it can happen under specific circumstances, usually done to adjust to shifting market conditions or to meet insider demands who might need to sell their shares for valid reasons. All depends on rules and regulations of the respective country and its market regulator.
Risks associated with investing in a company during its IPO lock-up period
Investors often pay close attention to the expiration of an IPO lock-up period because it affects the company’s stock price. Purchasing stock in a company during the IPO lock-in period carries various risks and returns.
There are chance of making money in short term investment if the market is bullish, fundamental of the company is strong and stocks are locked up for certain time, which means there is low supply of the tradable stocks.
After the lock-in period expires, a significant share sale could result in a significant decline in the stock price. Insiders may have a more thorough insight into the business’s finances and prospects, which could give them an unfair advantage over other investors. So investment on the stocks should always be backed with strong research and risk taking capacity of self.
The IPO lock-in period is a vital mechanism for stabilizing the market for a company’s shares following an IPO. It is intended to prevent a sudden influx of shares into the market, which could cause a sharp decline in the stock price. While the expiration of an IPO lockup period can be a significant event for investors, it is worthwhile to consider the risks associated with investing in a company during its IPO lockup period.
How does the lock-in period benefit investors?
A: The lock-in period promotes stability, discourages short-term trading, and aligns investor interests with the long-term success of companies.
What sectors are subject to the lock-in period in Nepal?
A: The lock-in period applies to sectors like hydro, investment, manufacturing & processing, and hotels following IPO allotment.
How does the combination of the lock-in period and early dividend distribution fortify market stability?
A: By ensuring main promoters maintain their shares initially, the risk of rapid share sell-offs during market challenges is mitigated, preserving Nepal’s capital market integrity.