Even as companies floating primary shares struggle to receive good response from investors, more than a dozen of companies are preparing to issue the initial public offerings (IPOs).

A total of 16 companies—8 hydropower companies and 6 microfinance institutions—- have applied at the stock market regulator Securities Board of Nepal (Sebon) seeking permission to issue the IPOs.

In the last two months, Sebon has approved six companies to issue primary shares worth Rs2.47 billion. Of them, four were hydropower companies and the remaining two, microfinance companies. As of now, 17 hydropower companies have been listed on the Nepal Stock Exchange (NEPSE).

Of late, investors’ confidence has taken a beating when it comes to subscribing IPOs. This has resulted in low subscription of primary shares, mainly of hydropower companies.

In the past, IPOs used to be over-subscribed including that of hydropower companies. Given the bearish trend, banks’ higher interest rate, inconsistent government policy, the overall stock market is in free fall, which has also affected the IPOs.

The IPOs floated by Radhi Hydropower Company, Joshi Hydropower Company, Ghalemdi Hydropower Company, Universal Power, Shuvam Power Company, Panchthar Power Company, Union Hydropower, Mountain Hydro Nepal, Reliance Finance and Shivam Cement received poor response from investors.

Panchthar Power Company is one of them. Of the company’s 962,500 units shares floated in the market, only 18.16 percent were subscribed.

Shivam Cement, one of the country leading cement companies faced a similar fate. While many thought that the company’s primary shares will be well received, only 54 percent has been subscribed as of now. The company which floated 4,699,640 units shares in the market has been forced to extend the application deadline to March.

Stock analysts attribute investors’ cold response to the IPOs to the current status of the stock market. They said that since the stock market is going through a bearish trend, investors are not sure if their investment will give good returns. “Investors expecting good returns by selling their primary shares to the secondary market have been discouraged by the bearish trend that Nepse is currently going through,” said Bharat Ranabhat, president of Stockbrokers’ Association of Nepal.

For the past one year, NEPSE has been in free fall as the market index plunged to around 1,100 points. While almost all sub-indices have been affected, the hydropower index that used to hover around 2,800 points two years ago has now shrunk to 1,107 points.

The demand for hydropower stocks has shrivelled so badly that an investor can buy shares of Upper Tamakoshi Hydropower Company – one of the attractive companies in the segment – for as low as Rs220 per share.

A senior official of Himal Dolakha Hydropower said they are confident that their IPO will get positive response from the market. “We received good response even for the IPOs of our subsidiary Joshi Hydropower issued in mid-December,” the source said.