Cold market leaves IPOs in hot water; how primary share offerings have fared

The Facebook initial public offering is making more news for destroying rather than creating wealth.

In India, where market is tumbling, the situation is not a tad better.

In such a fluid scenario, a listing is more of an exit opportunity for big players than a tool to create wealth for the retail investor.

As another IPO, Speciality Restaurants, lists on Wednesday, ET looks at how primary share offerings have fared:

ET View: Look at the Long Term

This is neither the end of IPOs nor anunalloyed tragedy . A volatile market precludes the market price serving as a benchmark to judge if an issue priced the share right . Future earnings are the only true test of that. A huge listing gain actually means that the issuing company got less capital than it ought to have .

The ground is ready for radical reform of IPOs , to allot shares only to those who have the information and the expertise needed to price a share right .

For too long , retail investors have chased listing gains , with false encouragement from regulation .