Market Magic

Why do people run after these IPOs?

BARUN JHA

INDIATIMES NEWS NETWORK[ THURSDAY, AUGUST 18, 2005 01:11:18 AM]


"Investment in IPO is like using a surgeon's knife. It can kill your savings or can make you prosperous."

The market has been abuzz with many initial public offerings (IPOs) in the recent past. There are also talks doing the rounds about necessary steps and possible reforms in the IPO and share allotment procedures that could be taken to lure back retail investors to the equity markets.

Traditionally, the IPO market has been a major route through which new investors enter the market. The markets witnessed a lot of new investors entering the equity market in 1980s and early 1990s. However, the recent market trends show a significant shortfall in the new entrants, particularly those coming through the IPO route. While the reformatory measures could be a major boost for the new investors, limited understanding of the IPO market jargon is also often considered as a setback for potential entrants in the market through this route.

Today's retail investors are considered to have developed an improved risk-taking appetite, but this class of new investors may still feel lost in the jungle of words like, red herring prospectus, draft offer document, book building, floor price, syndicate members, green-shoe option, e-IPO, safety net, open book/closed book, hard underwriting, qualified institutional buyer (QIB) and many more. And besides the words, there are a number of processes involved with an IPO that lots of potential investors still fail to connect with.

Here is an Initial Primer Offering that can help the new investors to become more familiar with the world of IPOs.

posted by Arhaan @ 10:31 AM