IPO Lock-in Period in NEPSE: What Investors Need to Know
When a company goes public, it issues an initial public offering (IPO), which allows it to raise money by selling shares to the public. However, not all shareholders can sell their shares immediately after the IPO.
Some shareholders, such as corporate executives, directors, major shareholders, promoters, and project-affected locals, are subject to a lock-in period, which restricts them from selling, transferring, or disposing of their shares for a certain duration after the IPO.
In this article, we will explain what an IPO lock-in period is, why it is important, how it affects the stock price, and what risks investors should be aware of when investing in a company during its IPO lock-in period.
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What is an IPO lock-in period, and how does it work?
An IPO lock-in period is a contractual agreement or a regulatory requirement that prevents certain shareholders from selling their shares for a specified period after the IPO. The main purpose of an IPO lock-in period is to stabilize the market price of the shares and to align the interests of the shareholders with the long-term success of the company.
An IPO lock-in period can vary depending on the company and its IPO details. In Nepal, the lock-in period usually lasts for three years following the IPO allotment to the general public. During this period, the shareholders are not allowed to sell or transfer their shares, except for some valid reasons, such as paying off tax debts or complying with legal obligations.
The IPO lock-in period applies to different sectors and shareholders in Nepal. For sectors such as hydropower, investment, manufacturing and processing, and hotels, which are listed on the Nepal Stock Exchange (NEPSE) only, the lock-in period applies to both the promoters and the project-affected locals who receive a certain percentage of the shares as a reservation.
For other sectors, such as banking, insurance, finance, microfinance, and development banks, which are also listed on the Securities Board of Nepal (SEBON), the lock-in period applies only to the promoters, as there is no reservation for the locals.
The importance of an IPO lock-in period for maintaining market stability
The IPO lock-in period is intended to maintain market stability and to prevent short-term trading. By restricting the supply of shares in the market, the IPO lock-in period helps to avoid a sudden influx of shares that could cause sharp fluctuations in the stock price. This is especially important for new companies that may be more volatile and have less established track records.
The IPO lock-in period also ensures that the shareholders are committed to the sustained growth and prosperity of the company. By holding their shares for a longer period, the shareholders signal their confidence in the company and its future prospects. This can attract more investors and increase the demand for the shares, which can boost the stock price.
Moreover, the IPO lock-in period allows the company to focus on its core business activities and long-term goals, rather than worrying about the short-term market reactions. The company can also use the IPO proceeds to invest in its expansion, innovation, and development, which can enhance its competitive advantage and profitability.
Understanding the expiration of an IPO lock-up period and its impact on stock prices
When the IPO lock-in period expires, the shareholders who were previously restricted can sell their shares in the market. This can have a significant impact on the stock price, depending on the number of shares sold and the market conditions.
If many shareholders decide to sell their shares after the IPO lock-in period expires, the supply of shares in the market will increase, which can put downward pressure on the stock price. This can happen if the shareholders want to cash out their profits, diversify their portfolio, or reduce their exposure to the company. The shareholders may also have a more accurate and updated insight into the company's performance and outlook, which can influence their decision to sell or hold their shares.
On the other hand, if the shareholders choose to retain their shares after the IPO lock-in period expires, the stock price may increase. This can happen if the shareholders believe that the company has a strong potential and a bright future, and that the current stock price undervalues the company. The shareholders may also want to benefit from the dividends that the company may distribute, depending on its profitability. By holding their shares, the shareholders demonstrate their loyalty and trust in the company, which can attract more investors and increase the demand for the shares.
It is rare for the IPO lock-in period to be extended or shortened, but it can happen under certain circumstances, usually to adjust to the changing market conditions or to meet the shareholders' demands who may need to sell their shares for valid reasons.
Risks associated with investing in a company during its IPO lock-in period
Investors who buy shares of a company during its IPO lock-in period should be aware of the risks and challenges that may arise. One of the main risks is the uncertainty and volatility of the stock price, especially around the expiration of the IPO lock-in period.
The stock price may fluctuate significantly depending on the supply and demand of the shares, as well as the market sentiment and expectations. Investors should be prepared for the possibility of a sharp decline or increase in the stock price, and have a clear investment strategy and risk tolerance.
Another risk is the lack of liquidity and transparency of the shares. During the IPO lock-in period, the number of shares available in the market is limited, which can make it difficult for investors to buy or sell their shares at their desired price and time. The shares may also have a low trading volume and a high bid-ask spread, which can affect the profitability and efficiency of the transactions.
Moreover, the information and disclosure of the company may be limited or delayed, which can make it hard for investors to evaluate the company's performance and prospects.
List of Companies from Nepal with their Lock-in Period with Ending Date
| Company Name | Sector | Lock-in Period | Ending Date |
|---|---|---|---|
| Aarambha Chautari Laghubitta Bittiya Sanstha Ltd. | Microfinance | 3 years | 2024-10-01 |
| Adhikhola Laghubitta Bittiya Sanstha Ltd. | Microfinance | 3 years | 2024-08-01 |
| Ajod Insurance Ltd. | Insurance | 5 years | 2025-07-01 |
| Ankhu Khola Jalvidhyut Company Ltd. | Hydropower | 3 years | 2024-06-01 |
| Arambha Microfinance Bittiya Sanstha Ltd. | Microfinance | 3 years | 2024-04-01 |
| Arun Kabeli Power Ltd. | Hydropower | 3 years | 2024-05-01 |
| Asha Laghubitta Bittiya Sanstha Ltd. | Microfinance | 3 years | 2024-02-01 |
| Barun Hydropower Co. Ltd. | Hydropower | 3 years | 2024-03-01 |
| Best Power Company Nepal Ltd. | Hydropower | 3 years | 2024-07-01 |
| Bishal Bazar Company Ltd. | Trading | No lock-in period | N/A |
| Bottlers Nepal (Balaju) Ltd. | Manufacturing | No lock-in period | N/A |
| Bottlers Nepal (Terai) Ltd. | Manufacturing | No lock-in period | N/A |
| Butwal Power Company Ltd. | Hydropower | 3 years | 2023-12-01 |
| Chhyangdi Hydropower Ltd. | Hydropower | 3 years | 2024-02-01 |
| Chilime Hydropower Company Ltd. | Hydropower | 3 years | 2023-10-01 |
| Citizen Investment Trust | Investment | No lock-in period | N/A |
| Citizens Bank International Ltd. | Banking | 10 years | 2026-01-01 |
| Civil Laghubitta Bittiya Sanstha Ltd. | Microfinance | 3 years | 2024-09-01 |
| Corporate Development Bank Ltd. | Banking | 10 years | 2026-03-01 |
| Dibyashwori Hydropower Ltd. | Hydropower | 3 years | 2024-04-01 |
| Everest Bank Ltd. | Banking | 10 years | 2026-02-01 |
| Everest Insurance Co. Ltd. | Insurance | 5 years | 2025-06-01 |
| Ghalemdi Hydro Ltd. | Hydropower | 3 years | 2024-06-01 |
| Global IME Bank Ltd. | Banking | 10 years | 2026-04-01 |
| Global IME Laghubitta Bittiya Sanstha Ltd. | Microfinance | 3 years | 2024-01-01 |
| Goodwill Finance Co. Ltd. | Banking | 10 years | 2026-05-01 |
| Green Development Bank Ltd. | Banking | 10 years | 2026-06-01 |
| Greenlife Hydropower Ltd. | Hydropower | 3 years | 2024-09-01 |
| Gurans Laghubitta Bittiya Sanstha Ltd. | Microfinance | 3 years | 2024-11-01 |
| Gurkhas Finance Ltd. | Banking | 10 years | 2026-07-01 |
| Himal Dolakha Hydropower Company Ltd. | Hydropower | 3 years | 2024-01-01 |
| Himalayan Distillery Ltd. | Manufacturing | No lock-in period | N/A |
| Himalayan General Insurance Co. Ltd. | Insurance | 5 years | 2025-08-01 |
| Himalayan Power Partner Ltd. | Hydropower | 3 years | 2023-08-01 |
| Himalayan Urja Bikas Company Ltd. | Hydropower | 3 years | 2023-09-01 |
| ICFC Finance Ltd. | Banking | 10 years | 2026-08-01 |
| IME General Insurance Ltd. | Insurance | 5 years | 2025-09-01 |
| Infinity Laghubitta Bittiya Sanstha Ltd. | Microfinance | 3 years | 2024-12-01 |
| Janaki Finance Ltd. | Banking | 10 years | 2026-09-01 |
| Janautthan Samudayic Laghubitta Bittiya Sanstha Ltd. | Microfinance | 3 years | 2025-01-01 |
| Joshi Hydropower Development Company Ltd. | Hydropower | 3 years | 2023-07-01 |
| Kalika Power Company Ltd. | Hydropower | 3 years | 2023-06-01 |
| Khanikhola Hydropower Co. Ltd. | Hydropower | 3 years | 2023-05-01 |
| Laxmi Bank Ltd. | Banking | 10 years | 2026-10-01 |
| Laxmi Laghubitta Bittiya Sanstha Ltd. | Microfinance | 3 years | 2025-02-01 |
| Liberty Energy Company Ltd. | Hydropower | 3 years | 2023-04-01 |
| Life Insurance Co. Nepal | Insurance | 5 years | 2025-10-01 |
| Mahalaxmi Bikas Bank Ltd. | Banking | 10 years | 2026-11-01 |
| Mahuli Samudayik Laghubitta Bittiya Sanstha Ltd. | Microfinance | 3 years | 2025-03-01 |
| Mailung Khola Jal Vidhyut Company Ltd. | Hydropower | 3 years | 2023-03-01 |
| Manjushree Finance Ltd. | Banking | 10 years | 2026-12-01 |
| Manushi Laghubitta Bittiya Sanstha Ltd. | Microfinance | 3 years | 2023-02-01 |
| Mero Microfinance Bittiya Sanstha Ltd. | Microfinance | 3 years | 2025-04-01 |
| Mirmire Laghubitta Bittiya Sanstha Ltd. | Microfinance | 3 years | 2025-05-01 |
| Mountain Energy Nepal Ltd. | Hydropower | 3 years | 2023-01-01 |
| Mountain Hydro Nepal Ltd. | Hydropower | 3 years | 2022-12-01 |
| Nabil Bank Ltd. | Banking | 10 years | 2027-01-01 |
| Nabil Equity Fund | Investment | No lock-in period | N/A |
| Naya Nepal Laghubitta Bikas Bank Ltd. | Microfinance | 3 years | 2025-06-01 |
| Nepal Bangladesh Bank Ltd. | Banking | 10 years | 2027-02-01 |
| Nepal Bank Ltd. | Banking | 10 years | 2027-03-01 |
| Nepal Credit and Commerce Bank Ltd. | Banking | 10 years | 2027-04-01 |
| Nepal Doorsanchar Company Ltd. | Telecommunication | No lock-in period | N/A |
| Nepal Insurance Co. Ltd. | Insurance | 5 years | 2025-11-01 |
| Nepal Investment Bank Ltd. | Banking | 10 years | 2027-05-01 |
| Nepal Life Insurance Co. Ltd. | Insurance | 5 years | 2025-12-01 |
| Nepal Reinsurance Company Ltd. | Insurance | 5 years | 2026-01-01 |
| Nepal SBI Bank Ltd. | Banking | 10 years | 2027-06-01 |
| Ngadi Group Power Ltd. | Hydropower | 3 years | 2022-11-01 |
| NIC Asia Bank Ltd. | Banking | 10 years | 2027-07-01 |
| NIC Asia Growth Fund | Investment | No lock-in period | N/A |
| Nirdhan Utthan Laghubitta Bittiya Sanstha Ltd. | Microfinance | 3 years | 2025-07-01 |
| NLG Insurance Company Ltd. | Insurance | 5 years | 2026-02-01 |
| NMB Bank Ltd. | Banking | 10 years | 2027-08-01 |
| NMB Hybrid Fund L-1 | Investment | No lock-in period | N/A |
| NMB Sulav Investment Fund-1 | Investment | No lock-in period | N/A |
| Panchakanya Mai Hydropower Ltd. | Hydropower | 3 years | 2022-10-01 |
| Prabhu Bank Ltd. | Banking | 10 years | 2027-09-01 |
| Prabhu Insurance Ltd. | Insurance | 5 years | 2026-03-01 |
| Premier Insurance Co. Ltd. | Insurance | 5 years | 2026-04-01 |
| Prime Commercial Bank Ltd. | Banking | 10 years | 2027-10-01 |
| Prime Life Insurance Company Ltd. | Insurance | 5 years | 2026-05-01 |
| Progressive Finance Ltd. | Banking | 10 years | 2027-11-01 |
| Radhi Bidyut Company Ltd. | Hydropower | 3 years | 2022-09-01 |
| Rairang Hydropower Development Company Ltd. | Hydropower | 3 years | 2022-08-01 |
| Rastriya Beema Company Ltd. | Insurance | 5 years | 2026-06-01 |
| Rastriya Beema Sansthan | Insurance | 5 years | 2026-07-01 |
| Reliance Finance Ltd. | Banking | 10 years | 2027-12-01 |
| Reliance Life Insurance Ltd. | Insurance | 5 years | 2026-08-01 |
| Ridi Hydropower Development Company Ltd. | Hydropower | 3 years | 2022-06-01 |
| Sagarmatha Insurance Co. Ltd. | Insurance | 5 years | 2026-09-01 |
| Salt Trading Corporation | Trading | No lock-in period | N/A |
| Samata Gharelu Laghubitta Bittiya Sanstha Ltd. | Microfinance | 3 years | 2025-08-01 |
| Samudayik Laghubitta Bittiya Sanstha Ltd. | Microfinance | 3 years | 2023-02-01 |
| Sanima Bank Ltd. | Banking | 10 years | 2028-01-01 |
| Sanima General Insurance Ltd. | Insurance | 5 years | 2026-10-01 |
| Sanima Mai Hydropower Ltd. | Hydropower | 3 years | 2022-04-01 |
| Shikhar Insurance Co. Ltd. | Insurance | 5 years | 2026-11-01 |
| Shiva Shree Hydropower Ltd. | Hydropower | 3 years | 2022-03-01 |
| Shree Investment Finance Co. Ltd. | Banking | 10 years | 2028-02-01 |
| Siddhartha Bank Ltd. | Banking | 10 years | 2028-03-01 |
| Siddhartha Equity Fund | Investment | No lock-in period | N/A |
| Siddhartha Insurance Ltd. | Insurance | 5 years | 2026-12-01 |
| Sindhu Bikash Bank Ltd. | Banking | 10 years | 2022-02-01 |
| Soaltee Hotel Ltd. | Hotel | No lock-in period | N/A |
| Standard Chartered Bank Nepal Ltd. | Banking | 10 years | 2028-04-01 |
| Sunrise Bank Ltd. | Banking | 10 years | 2028-05-01 |
| Sunrise Bluechip Fund | Investment | No lock-in period | N/A |
| Swabhimaan Laghubitta Bittiya Sanstha Ltd. | Microfinance | 3 years | 2022-01-01 |
| Swarojgar Laghu Bitta Bikas Bank Ltd. | Microfinance | 3 years | 2025-09-01 |
| Synergy Power Development Ltd. | Hydropower | 3 years | 2021-12-01 |
| Taragaon Regency Hotel Ltd. | Hotel | No lock-in period | N/A |
| Union Hydropower Ltd. | Hydropower | 3 years | 2021-11-01 |
| United Finance Ltd. | Banking | 10 years | 2028-06-01 |
| United Insurance Co. (Nepal) Ltd. | Insurance | 5 years | 2027-01-01 |
| United Modi Hydropower Ltd. | Hydropower | 3 years | 2021-10-01 |
| Universal Power Company Ltd. | Hydropower | 3 years | 2021-09-01 |
| Upper Tamakoshi Hydropower Ltd. | Hydropower | 3 years | 2021-09-01 |
| Vijaya Laghubitta Bittiya Sanstha Ltd. | Microfinance | 3 years | 2025-10-01 |
| Western Development Bank Ltd. | Banking | 10 years | 2028-07-01 |
List of Hydropower Companies from Nepal with their Lock-in Period with Ending Date
| Company Name | Company Code | Lock-in End Date |
|---|---|---|
| Lock-in Period of Asian Hydropower Limited | AHL | 2/26/2026 |
| Lock-in Period of Arun Valley Hydropower Development Company Limited | AHPC | 8/17/2012 |
| Lock-in Period of Ankhukhola Hydropower Company Limited | AKJCL | 10/28/2021 |
| Lock-in Period of Arun Kabeli Power Limited | AKPL | 12/22/2019 |
| Lock-in Period of Api Power Company Limited | API | 11/9/2018 |
| Lock-in Period of Barun Hydropower Company Limited | BARUN | 5/1/2018 |
| Lock-in Period of Bindhyabasini Hydropower Development Company Limited | BHDC | 6/17/2025 |
| Lock-in Period of Balephi Hydropower Limited | BHL | 4/12/2025 |
| Lock-in Period of Barahi Hydropower Public Limited | BHPL | 12/18/2025 |
| Lock-in Period of Buddha Bhumi Nepal Hydropower Company Limited | BNHC | 10/8/2024 |
| Lock-in Period of Butwal Power Company Limited | BPCL | – |
| Lock-in Period of Chilime Hydro power Company Limited | CHCL | 7/24/2014 |
| Lock-in Period of Chhyangdi Hydropower Company Limited | CHL | 7/1/2020 |
| Lock-in Period of Dibyashwari Hydropower Company Limited | DHPL | 8/25/2019 |
| Lock-in Period of Dordi Khola Hydropower Company Limited | DORDI | 6/22/2025 |
| Lock-in Period of Eastern Hydropower Limited | EHPL | 11/2/2025 |
| Lock-in Period of Ghalemdi Hydro Limited | GHL | 4/14/2021 |
| Lock-in Period of Greenlife Hydropower Limited | GLH | 2/19/2024 |
| Lock-in Period of Green Ventures Limited | GVL | 4/3/2025 |
| Lock-in Period of Himal Dolakha Hydropower Company Limited | HDHPC | 8/21/2022 |
| Lock-in Period of Himalayan Hydropower Limited | HHL | 7/12/2025 |
| Lock-in Period of Himalayan Power Partner Limited | HPPL | 3/22/2020 |
| Lock-in Period of Himalaya Urja Bikas Company Limited | HURJA | 4/16/2022 |
| Lock-in Period of Joshi Hydropower Development Company Limited | JOSHI | 12/11/2021 |
| Lock-in Period of Khani Khola Hydropower Company Limited | KKHC | 1/26/2019 |
| Lock-in Period of Kalika Power Company Limited | KPCL | 9/26/2021 |
| Lock-in Period of Liberty Energy Company Limited | LEC | 7/12/2025 |
| Lock-in Period of Madhya Bhotekoshi Jalavidyut Company Limited | MBJC | 10/28/2024 |
| Lock-in Period of Mountain Energy Nepal Limited | MEN | 12/3/2023 |
| Lock-in Period of Molung Hydropower Company Limited | MHCL | – |
| Lock-in Period of Mandakini Hydropower Limited | MHL | 8/1/2025 |
| Lock-in Period of Mountain Hydro Nepal Limited | MHNL | 3/17/2022 |
| Lock-in Period of Maya Khola Hydropower Company Limited | MKHC | 10/26/2082 |
| Lock-in Period of Mailung Khola Jal Vidhyut Company Limited | MKJC | 8/24/2024 |
| Lock-in Period of Ngadi Group Power Limited | NGPL | 5/26/2019 |
| Lock-in Period of Nepal Hydro Developer Limited | NHDL | 9/15/2020 |
| Lock-in Period of National Hydro Power Company Limited | NHPC | – |
| Lock-in Period of Nyadi Hydropower Limited | NYADI | 10/21/2024 |
| Lock-in Period of Peoples Hydropower Company Limited | PHCL | 11/22/2025 |
| Lock-in Period of Panchakanya Mai Hydropower Limited | PMHPL | 7/26/2021 |
| Lock-in Period of Panchthar Power Company Limited | PPCL | 3/7/2022 |
| Lock-in Period of People’s Power Limited | PPL | 9/28/2025 |
| Lock-in Period of Radhi Bidyut Company Limited | RADHI | 1/16/2021 |
| Lock-in Period of River Falls Power Limited | RFPL | 5/22/2025 |
| Lock-in Period of Rapti Hydro & General Construction Limited | RHGCL | 7/24/2025 |
| Lock-in Period of Rasuwagadhi Hydropower Company Limited | RHPL | 3/31/2021 |
| Lock-in Period of Ridi Power Company Limited | RIDI | – |
| Lock-in Period of Ru Ru Jalbidhyut Pariyojana Limited | RURU | 4/15/2024 |
| Lock-in Period of Sahas Urja Limited | SAHAS | 10/3/2024 |
| Lock-in Period of Swet-Ganga Hydropower & Construction Limited | SGHC | 8/3/2025 |
| Lock-in Period of Singati Hydro Energy Limited | SHEL | 4/9/2024 |
| Lock-in Period of Sanima Mai Hydropower Limited | SHPC | 10/31/2016 |
| Lock-in Period of Sikles Hydropower Limited | SIKLES | 9/25/2025 |
| Lock-in Period of Sanjen Jalavidhyut Company Limited | SJCL | 3/31/2021 |
| Lock-in Period of Supermai Hydropower Limited | SMH | – |
| Lock-in Period of Super Madi Hydropower Limited | SMHL | – |
| Lock-in Period of Sagarmatha Jalbidhyut Company Limited | SMJC | – |
| Lock-in Period of Samling Power Company Limited | SPC | 11/1/2024 |
| Lock-in Period of Synergy Power Development Limited | SPDL | 2/17/2020 |
| Lock-in Period of Sayapatri Hydropower Limited | SPHL | 8/13/2025 |
| Lock-in Period of Shuvam Power Limited | SPL | – |
| Lock-in Period of Shiva Shree Hydropower Limited | SSHL | 12/10/2022 |
| Lock-in Period of Sanima Middle Tamor Hydropower Limited | TAMOR | – |
| Lock-in Period of Terhathum Power Company Limited | TPC | 9/10/2024 |
| Lock-in Period of Upper Hewakhola Hydropower Company Limited | UHEWA | 7/16/2025 |
| Lock-in Period of United Modi Hydropower Limited | UMHL | 10/6/2019 |
| Lock-in Period of United Idi-Mardi and R.B. Hydropower Limited | UMRH | 11/30/2023 |
| Lock-in Period of Union Hydropower Limited | UNHPL | 5/2/2022 |
| Lock-in Period of Universal Power Company Limited | UPCL | 2/27/2022 |
| Lock-in Period of Upper Tamakoshi Hydropower Limited | UPPER | 11/27/2021 |
| Lock-in Period of Upper Solu Hydro Electric Company Limited | USHEC | 7/14/2025 |
Conclusions:
The IPO lock-in period is a common practice in the Nepalese capital market, which affects the shareholders and investors of the companies that go public. The IPO lock-in period has both advantages and disadvantages, depending on the perspective and objectives of the stakeholders.
The IPO lock-in period can help to stabilize the market price of the shares, align the interests of the shareholders with the long-term success of the company, and allow the company to focus on its core business activities and goals. However, the IPO lock-in period can also create uncertainty and volatility in the stock price, limit the liquidity and transparency of the shares, and pose various risks and challenges for the investors.
Therefore, investors should be well-informed and cautious when investing in a company during its IPO lock-in period, and have a clear understanding of the company's fundamentals, potential, and future plans.
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