I have a doubt in the write-up of Equity (Market Efficiency) IPO Anomaly
It says that IPO lists at a price substantially higher than the subscription price.
And in the explanation part it says that- Investment Bankers advice a lower issue price so that the IPO is successful.
I find the two statements contradictory.
I agree with both the statements but somehow the context here isn’t clear to me
investment banker wants ki low issue price rkhe ipo ka jisse vo sucessfully market me subscribe ho jaye and unki firm ka name khrab na ho coz if price jyadahone se minimum subscription nhi ho paye to IPO fails and isse unki firm ka name bhut khrab ho jayega
aur jab aisa hota hai ki ipo apni value se km pr issue hota hai to more people want to purchase it due to which its price get far higher than uska issue price
hope it helps
IPO subscription price is decided by investment banker after assessing the market situation.
And is generally lower than the anticipated price so that it gets fully subscribed and the insider can sell their shares at higher price on the listing day
Thank you Sir