Pre-IPO placements surge as investors succumb to FOMO

Big investors are swooping in on companies right before their initial public offerings (IPOs) open, locking in shares that would be harder to get once subscriptions start.

- Mansi Verma & Priyamvada C.

The scramble for shares starts immediately after the IPO price band is announced, but before the IPO opens to anchor investors.

The recent IPOs of Lenskart, Physics Wallah and Aequs have seen investors buying shares in so-called pre-IPO placements, where investors snap up unlisted shares on the eve of an IPO. This is different from pre-IPO fundraises in which investors buy 12-18 months before the IPO, and anchor investments where large investors buy shares reserved for institutions in IPOs.

“In the current market, we are seeing a resurgence of late-stage interest in pre-IPO placements, particularly in high-growth and consumer-facing businesses,” said Prakash Bulusu, joint chief executive officer (CEO), IIFL Capital. “Investors want to lock in valuations that often look more attractive than post-listing levels.”