Samir Arora’s suggestion is quite something mutual funds should stop participating in IPOs, QIPs and placements for 30 days and see what happens.
I don’t think a complete boycott is realistic, but the point behind it is interesting. There’s been a lot of fresh equity supply hitting the market, and at some point you have to ask whether the market has enough demand to absorb all of it.
If institutions pull back from new issues, IPO pricing could get more realistic and companies may have to work harder to attract investors.But there’s also a flip side if that money moves back into existing listed stocks, it could actually support the broader market.
What do you guys think are we seeing too much supply, or is this just how a healthy market should work?
If the IPO window suddenly gets quieter while secondary-market stocks get bids, we’ll know the money was never missing, and it was just busy standing in the IPO queue.
Personally, I don’t think the number of IPOs is the problem. It’s when companies start coming at valuations that don’t make sense just because the market is willing to pay…
He rightly said that there are too many IPOs coming out, and retail investors are just rushing to be a part of it. Feels like some big players are trying to make a lot of money from retail investors through these IPOs. It kind of feels similar to what happened in 1999 and 2007.
