Don't confuse listing gains with wealth creation & chase every shiny IPO

When I meet retail investors, I often hear:

"But sir, it’s a new-age company. They have a great story — they’ll grow big, like the global tech giants."

I understand the excitement. Storytelling is powerful — it sells visions, fuels hope, and drives demand. But the market is a ruthless judge. It doesn’t reward narratives; it rewards numbers. It rewards execution. And it punishes dreams that are priced too high.

Many IPOs today are no longer wealth-creation events — they’ve become wealth-exit events. The primary beneficiaries? Promoters, early private equity investors, and insiders.

What was once a bridge to raise capital for genuine business expansion has morphed into a high-stakes game of musical chairs, where the retail investor often shows up just as the music is about to stop.

There’s an old saying in market circles:

Before the IPO, promoters have vision and investors have money. After the IPO, investors have vision and promoters have money.

The process is subtle, but remarkably efficient:

• Promoters offload significant stake.

• PE funds quietly book outsized profits.

• Anchor investors secure preferential allocations and exit within months.

• The public — wooed by glossy roadshows, flashy ads, and influencer “analysis” — piles in at the peak of optimism.

• And then, the stock quietly loses steam.

Just look at the IPO fundraising trend from 2007 till 2025 — the chart speaks volumes.

You’ll notice IPO peaks during bullish phases when liquidity is abundant and optimism sky-high. These moments aren’t coincidences — they’re meticulously timed.

Smart sellers don’t exit in panic. They exit into euphoria.

Now, let’s not paint all IPOs with the same brush. There are businesses that list at reasonable valuations, with solid fundamentals, visionary leadership, and long runways for growth.

But these are rare gems, not the norm.

The problem isn’t with IPOs. The problem is how retail investors approach them — often blinded by hype and driven by FOMO.

Markets are brutal teachers. And one lesson they’ve repeatedly offered me is this:

Wealth is rarely created in the initial buzz. It is created in the patient years that follow.

So here’s my humble advice, drawn from years of watching bull and bear cycles unfold:

• Don’t confuse listing gains with wealth creation.

• Study the business, not just the subscription numbers.

• Valuation matters — always.

• Resist the temptation to chase every shiny new listing.

• Let the business prove itself post-listing. The market almost always gives you a second chance.

As I write this, 2025 is shaping up to be another bumper IPO year. New listings are queuing up, armed with grand visions and glossy pitch decks.

But remember:

Where dreams list, wealth often doesn’t.

The dream isn’t in getting an IPO allotment.

The real dream is in holding great businesses long after the cameras stop flashing.

Invest wisely.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.