IPO analysis: The black, white & 'grey' areas

Market experts have been following the IPO space over the last few days and evaluating how the recent IPOs have fared. There is one big listing slated early next week; some of these issues have struggled to get subscribed and some had to extend their timelines and lower their price points.

In an exclusive interview with CNBC-TV18, Debashis Basu, Editor of Moneylife Magazine and Jawahar Mulraj, Columnist in Equitymaster & India Representative for Institutional Investor Magazine discussed various issues related to the IPO space including the grey market premiums, role of merchant bankers and promoters etc.

Debashis Basu said there are international studies to prove that a frothy IPO market usually signifies a temporary or an intermediate market top. Analysing the role of grey market in the IPO market, Basu added, “The very fact that we are sitting here and using the term ‘grey market’ where there is a regulator and it's supposed to regulate everything open and above in full public view; this itself is an absolute complete failure of the regulatory mechanism.”

Jawahar Mulraj, Columnist in Equitymaster & India Representative for Institutional Investor Magazine opined that

both - the merchant bankers and the promoters are on the same side of the coin, they want to get the best price for their issue. He feels that the investors have to look after themselves, make up their own mind and do their own study and not depend on false signals such as the grey market-listing price, which is often erroneous