Nepalis living abroad will soon be able to invest directly in Nepal-based companies through foreign-currency initial public offerings, as the government moves to create a new channel for mobilising diaspora capital.

The Securities Board of Nepal (SEBON) has amended the Securities Registration and Issue Regulations, 2016, to allow companies jointly established by the government and non-resident Nepalis to raise up to 85 percent of their paid-up capital through public share issues.

The amended regulations have been forwarded to the finance ministry and are awaiting formal approval from the Cabinet, according to ministry officials.

Once endorsed, the provision will allow Nepalis living and working abroad to invest in primary share offerings using foreign currency.

Finance Minister Swarnim Wagle said on Saturday that the regulatory change was nearing final approval.

Addressing the 11th Non-Resident Nepali Association Asia Pacific Conference in Guangzhou, China, through a video message, Wagle urged the diaspora to invest in sectors with potential to generate jobs and reduce the country’s dependence on imports.

“Just a few days ago, we amended the securities allocation and issuance regulations to raise the permissible equity share from the government and the NRN Investment Fund to 85 percent,” Wagle said. “Invest with confidence and bring your knowledge, capital, and skills back home.”

He encouraged non-resident Nepalis to invest in tourism, information technology, green energy, high-value agriculture and industries that can substitute imports.

The regulatory change is aimed in particular at facilitating the proposed NRN Nepal Development Fund, a collective investment vehicle promoted by the Non-Resident Nepali Association (NRNA).

The NRNA has for years sought a mechanism to pool the savings of Nepalis living abroad and channel them into projects in Nepal.

The association has established the NRN Nepal Development Fund with a proposed capital of Rs10 billion. Under the proposed structure, the government will hold a five percent stake, founding promoters will hold 10 percent, and the remaining 85 percent will be raised from non-resident Nepalis through a foreign-currency IPO.

Under existing securities regulations, companies generally cannot raise more than 49 percent of their capital from the public through an IPO.

The revised provision would therefore allow the proposed NRN fund to have an unusually high proportion of its capital held by public shareholders.

Hem Raj Sharma, president of the NRNA, said the fund was intended to bring smaller diaspora investors into projects that have traditionally attracted larger individual investors.

“The fund was established to mobilise a minimum capital of Rs10 billion by bringing small-scale NRN investors under a collective umbrella,” Sharma said. “This decision paves the way for trading shares directly in foreign currency, with NRN shareholders also permitted to trade their equities among fellow diaspora members.”

Sharma said the NRN Nepal Development Fund would operate as an independent commercial company and that the NRNA would not bear its corporate liabilities.

The NRNA has argued that while significant amounts of money have been invested in Nepal by individual Nepalis living abroad, there has been no effective mechanism to pool relatively small investments and channel them into large domestic projects.

Anal Raj Bhattarai, chief executive officer of the NRN Nepal Development Fund, said individual Nepalis overseas would be able to invest between Rs100,000 and Rs100 million in the fund.

“This is a specialised corporate entity. Investors will not need to travel to Nepal to purchase or sell shares, as all transactions will take place seamlessly in foreign currency,” Bhattarai said. “Our target is to bring between 500,000 and 600,000 overseas Nepalis into this investment fold.”

The fund plans to invest in infrastructure, hydropower, tourism, agriculture and information technology. According to Bhattarai, it will prioritise commercially viable projects requiring an initial investment of at least Rs500 million to Rs600 million.

Returns generated from the investments will be eligible for repatriation abroad in foreign currency, according to the proposed model.

The fund plans to organise roadshows in countries with large Nepali communities to explain the investment process and subscription procedures to potential investors.

Nepal’s 2021 national population census recorded more than 2.2 million Nepali citizens living abroad, although the actual number of Nepalis overseas is believed to be higher when those who have acquired foreign citizenship or are not captured in official migration data are taken into account.