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Wednesday, 20 July 2011

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IPO offer prices too high?

Investors of the recently concluded Initial Primary Offerings are of the view that the offer prices are far too high and they are looking at other investment options, which would provide them with a higher return.

Market sources told Daily News Business yesterday that there was a gradual shift from IPOs to cheaper shares in the secondary market vis a vis investing in fresh IPOs.

This has been evidenced by the recently concluded IPOs such as Softlogic which was offered to the market at Rs 29 and now trading at 26, Expo Lanka which was offered at Rs 14 and coming out at Rs 13 and Free Lanka Trading offered at Rs 5 but now trading at Rs 3.90.

The fact that the much awaited Textured Jersey IPO expected to be oversubscribed by between ten and twenty times, was only three times oversubscribed also proves that investors are gradually losing confidence in the Primary Market and shifting to these other investment options such as different asset classes and property.

The asset classes that investors looking now at are: listed, convertible and redeemable debentures and Preference Shares while the property options that they are looking at are: gold, silver and antiques.

 

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