Jul 22, 2010

IPOs-Some Most Important Things to know about

IPOs only and only come in hot and bull market. Why? So that they can obtain the highest price.

Investors forget that Merchant Bankers are selling agents of the issuers. And many times they are also given extra fee for performance selling over and above fixed fee.
Merchant/Investment banking is a cream business. So many are in race to get mandates for IPOs from issuer companies. They will do everything to please the company.

SELL ON LISTING? If you’re lucky enough.
Most investors have only one funda for investing in IPOs.
To sell on listing!
They all think that they will be able to sell and outsmart everyone else.
They all feel so because of psychology. They have seen some issues listing at high premium and their listing premiums quoting in so called ‘gray-market’; and this brings the representative bias. The availability bias makes him confront only good and positive news and information. They ignore the discounted/failed listed IPOs. And in hot market there is all news of economic growth as well.

New sectors are not invented every now and then: The fad and fancy for ‘new’ in markets:
Many IPOs come which are highly pricey and shares of some peer company are already available in secondary market. Still