Chapter 4 · IPOs, FPOs and rights shares
What an IPO actually is
A company selling part of itself to the public for the first time — and why that is not the same as a bargain.
An Initial Public Offering is the first time a company sells shares to the general public. The money raised goes to the company, not to existing shareholders, and in exchange the public gets a stake and the company accepts the obligations of being listed.
In Nepal an IPO is where most people's investing life begins, because the application process is simple and the amounts are small. That accessibility is genuinely good. It also produces a habit worth naming early: treating every IPO as free money.
Why so many Nepali IPOs list above their issue price
Nepali IPOs are frequently priced at par, and demand routinely exceeds supply many times over. When far more money wants in than there are shares, the listing price tends to open above the issue price. That is a supply-and-demand outcome, not evidence that the business is good.
Which leads to the honest framing: applying for IPOs in Nepal has often been profitable, and the reason has more to do with pricing and rationing than with company quality. Understanding that difference is what stops you from carrying the same assumption into the secondary market, where nobody is rationing anything.
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