Is It Safe To Invest In An IPO? | BOOM | Govindraj Ethiraj, Ambareesh Baliga, Pranav Haldea
- 3 years ago
It has been an exciting time for IPO's in India. However, some of the latest IPO's have opened at discounts, including Glenmark Lifesciences and Nuvoco. What is the nature of the IPO rush we are seeing today and how does it compare to the last IPO goldrush in India? What does this mean for the financial markets in India? BOOM Explains.
Pranav Haldea, MD, Prime Database, says that in 2007, 100 IPO's floated and only 23 have given a positive return till date. More alarmingly, 31 of those companies have now been delisted or suspended and a further 17 are under surveillance. As of today, there has been a significant improvement in the kind of companies that enter the market since most of the initial capital is provided by venture capitalists, reducing the number of IPO's but increasing company valuations. Investors must consider the financials, governance, management of a company before going for an IPO.
Independent market analyst Ambareesh Baliga says that right from the beginning of the IPO season, about 85% money raised came from OFS, not the IPO. Nearly 1.5 crore new investors have come into the market in the last couple of months, ensuring huge liquidity in the market. No one currently applying for IPO's is looking for long-term investments, including HNI's and institutional investors.
Watch BOOM's Govindraj Ethiraj chat with Pranav Haldea and Ambareesh Baliga on the current state of Indian IPO's, stock markets and the risks of investing without researching.
Pranav Haldea, MD, Prime Database, says that in 2007, 100 IPO's floated and only 23 have given a positive return till date. More alarmingly, 31 of those companies have now been delisted or suspended and a further 17 are under surveillance. As of today, there has been a significant improvement in the kind of companies that enter the market since most of the initial capital is provided by venture capitalists, reducing the number of IPO's but increasing company valuations. Investors must consider the financials, governance, management of a company before going for an IPO.
Independent market analyst Ambareesh Baliga says that right from the beginning of the IPO season, about 85% money raised came from OFS, not the IPO. Nearly 1.5 crore new investors have come into the market in the last couple of months, ensuring huge liquidity in the market. No one currently applying for IPO's is looking for long-term investments, including HNI's and institutional investors.
Watch BOOM's Govindraj Ethiraj chat with Pranav Haldea and Ambareesh Baliga on the current state of Indian IPO's, stock markets and the risks of investing without researching.