Kathmandu: Evidence has surfaced of an organized scheme to manipulate the share price of Nepal Reinsurance Company (Nepal Re), allegedly involving powerful investors, public limited companies, and even regulators.
Investigations suggest that funds from a life insurance company were diverted by a small group of individuals to purchase Nepal Re shares, artificially inflating its value. Clickmandu reports that multiple public limited companies were also drawn into the scheme.
At the centre of the controversy is the Himalayan Group, led by prominent investors Sulav Agrawal and Dipak Bhatta, who are also linked to Himalayan Reinsurance and Himalayan Life Insurance. Sulav Agrawal, chair of Himalayan Life, is accused of using the insurer’s resources to accumulate Nepal Re shares, despite regulations limiting life insurers to invest only 10 percent of total assets in the stock market.
In a controversial move, the Nepal Insurance Authority recently amended its directive to raise that ceiling to 15 percent, despite records showing Himalayan Life had already breached the earlier limit. Instead of penalizing the company, the regulator appeared to facilitate greater investment, fueling suspicions of collusion.
As of mid-August, Himalayan Life alone held over 3.64 million shares of Nepal Re, valued at more than Rs 6 billion (US$ 450 million) at current market prices. Collectively, members of the Himalayan Group—including Himalayan Life, Crest Micro Life Insurance, Nepal Micro Insurance, Bhrikuti Stock Broking, and key individuals—controlled nearly 6.87 million shares, or a substantial stake in Nepal Re.
The group’s influence extends beyond insurance, with interests in microinsurance firms and even attempts to secure a license for a new stock exchange, Himalayan Stock Exchange. Related parties such as Crest Micro Life, Bhrikuti Stock Broking (linked to CEO Manoj Kumar Lal Karna’s family), and other allied entities have been actively involved in accumulating and offloading Nepal Re shares.
Critics allege that regulators have enabled these maneuvers. While Nepal’s Securities Board delayed approvals for several mutual funds, it swiftly cleared the Himalayan Life Insurance Mutual Fund, managed by Himalayan Investment Banker, within just 11 days.
Nepal Re’s own board has also supported measures that align with the Himalayan Group’s interests, including a rights issue proposal to double its capital, despite the government holding a 44 percent stake in the company.
The government now faces pressure to subscribe to the rights issue, or risk its stake being diluted through auctions, where state-backed institutions may end up repurchasing shares at a premium. This would indirectly boost Nepal Re’s net worth and expand Himalayan Life’s control.
Sources told Clickmandu that the broader plan aims to raise Nepal Re’s capital base to Rs 26 billion and overall assets to Rs 50 billion, in part by channeling government-backed investments into vehicles tied to Himalayan Life.
Critics warn that the scheme represents a dangerous conflict of interest: policyholders’ money, entrusted to insurers for financial security, is being diverted into speculative trading to enrich a small circle of investors, while regulators and state-owned institutions look the other way.
Comment Here