The Hindu Business Line : IPO riddles

This has reference to the editorial, “IPO lessons” (Business Line, February 12). Indeed, the primary market has suffered big jolts on account of various factors. The disappointing performance of Reliance Power scrip on debut in the bourses would add to the present turmoil. The withdrawal of two Initial Public Offerings recently on poor response is more or less unprecedented.

The grey market certainly had a role in luring a section of investors to overpriced issues. A few of these scrips suffered big blows on listing.

There must be some mechanism to check the pricing pattern of IPOs. The companies which launch over-priced IPOs reap huge gains at the cost of investors.

A section of the media and broking houses tends to work in tandem to create hype and euphoria among investors to ensure smooth passage of the offers. This is more or less unfair in a country where the secondary market is stable on account of timely regulatory oversight.

The investors, at large, and the small investors, in particular, should get a chance to analyse the pricing and performance of the companies going in for IPOs.

C. P. Velayudhan Nair Kochi

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IPO riddles