40.8 C
Monday, May 27, 2024

IPO investors invest with major discounts

Investors, wary of past underperforming IPOs from 2020 and 2021, are cautiously reentering the market, but only for attractive deals. A KKR & Co. Inc. survey of investors holding over $10 trillion in assets reveals that 43% are seeking IPO candidates that offer a 20-30% discount compared to listed peers to feel confident in investing.

The focus now is on reasonable valuations post-IPO, with a shift away from skyhigh valuations.

David Bauer, head of KKR’s equity capital markets, noted that certain IPOs might not recover due to issues like shareholder base, liquidity, or unproven business models.

While a fifth of the IPOs from the peak period are trading above their IPO price, only a fraction have performed well post-listing.

The investment sentiment has improved, with long-only accounts and hedge funds investing capital, and optimism prevails regarding the IPO market’s comeback in the next nine months. Yet, investor requirements have become stricter.

Companies are expected to show profitability sooner after IPO, and investors seek “de-risked offerings” with cornerstone or anchor investors.

Bauer mentioned that today’s investors are more conservative and cautious, favoring businesses with earnings, revenue, and stability in projections.

The anticipation is that the upcoming IPO class will be better tailored for the market. However, the desire for discounts remains steep, indicating continued apprehension from the losses sustained in previous IPOs.

Next Article

Related Articles

Paytm layoffs: Company may cut jobs of 5,000-6,300 employees amid crisis

Paytm Layoffs: Company May Cut Jobs of 5,000-6,300 Employees Amid Crisis In a significant move reflecting the ongoing challenges in the fintech sector, Paytm, one...

UAE: Gold Prices Drop, Offering Great Value in Early Trade

UAE: Gold Prices Drop, Offering Great Value in Early TradeIn a surprising turn of events, gold prices have seen a significant drop, creating a...

UAE: Silver Shines Bright Amid Record-High Gold Prices.

UAE: Silver Shines Bright Amid Record-High Gold Prices In a year marked by economic fluctuations and global uncertainties, the United Arab Emirates (UAE) has witnessed...

UAE Banks Report Increased Profits in Q1 2024, Al Ghurair Confirms.

UAE Banking Sector Thrives: Al Ghurair Reports Record Profits in Q1 2024 Surpassing Previous Year According to statements from prominent figures like Al Ghurair, chairman...

US Business Figure Condemns Elon Musk’s China Preference as Detrimental to India’s Interests

US Business Figure Condemns Elon Musk's China Preference as Detrimental to India's Interests In a surprising turn of events, a prominent US business figure has...

Latest Articles