IPO market in India has seen a strong growth with over US$1bn raised YTD this year which is 4x the amount raised in the last couple of years. At current pace, the number of issues this year is likely to be around 70, the highest since 2007. From an investor perspective however, IPOs suffer from information asymmetry as well as pro-cyclicality which should in principal make IPOs less attractive for investors. Data from last 12 years also suggest that just a third of IPOs outperform the market in the year post listing and just 25% outperform three years post listing. Given this track record, we believe that investors should remain sceptical of IPOs unless there is
convincing reason to believe otherwise.
