Author: nrn

CARE Ratings Nepal Limited has assigned the issuer rating of CARE-NP BBB (Is) [Triple B (Issuer Rating)] to NRN Infrastructure and Development Limited  on February 10, 2026. Issuers with this rating are considered to offer moderate degree of safety regarding timely servicing of financial obligations. The rating rationale highlights the company’s strength deriving from its strong promoter profile, backed by institutional promoters (~74%) including government owned entities (~27%), banks and financial institutions and NRNs. Additionally, the rating also takes into consideration experienced leadership, supported by a seasoned investment team and sound investment approval framework ensuring disciplined governance.

Valuation is essential for private equity (PE) and venture capital (VC) investments, shaping deal negotiations, growth monitoring, and exit strategies. In Nepal, where the PE/VC industry is emerging, accurate valuations are key but challenging due to limited market data, liquidity constraints, and evolving sectors.

Key Valuation Methods in Nepal

1. Discounted Cash Flow (DCF): Widely used for established companies with predictable cash flows, though less reliable for startups.
2. Comparable Company Analysis (CCA): Useful for mature industries but limited by available data.
3. Precedent Transaction Analysis: Analyzes recent deals in the same sector, but Nepal’s small transaction pool can hinder its application.
4. Venture Capital (VC) Method: Focuses on future exit value for early-stage startups in emerging sectors.
5. Asset-Based Valuation: Common in industries with tangible assets like real estate and manufacturing.

Challenges

• Limited Data: Private companies and opaque transactions make it hard to find comparables.
• Emerging Sectors: New industries like fintech and technology are difficult to value due to a lack of historical data.
• Political/Economic Instability: Adds uncertainty to future cash flow predictions.
• Liquidity Constraints: Underdeveloped capital markets complicate exit strategies.

Best Practices

To address these challenges, combining valuation methods, adjusting for local risks, and considering ESG factors can offer a more accurate and holistic view. Despite the complexities, firms can make informed investments by tailoring their approaches to Nepal’s unique market conditions.

Exiting a private equity investment is one of the most critical phases in the investment lifecycle. In “Private Equity Practices: Getting the Exit Right,” we dive into the key strategies that private equity firms use to maximize returns, including the importance of timing, market conditions, and selecting the right exit route. We also explore how to ensure a smooth handover for portfolio companies and stakeholders, addressing potential challenges and risks along the way. Mastering the exit process is essential for ensuring long-term success and maximizing the value of your investments.