An Analysis of Initial Public Offerings: Discrepancies Between Unlisted Market Valuations and Post-Listing Performance

I. Executive Summary

This report examines a notable phenomenon in the Initial Public Offering (IPO) market: instances where companies exhibit high valuations in the unlisted, or grey, market but experience significant price reductions upon official listing, subsequently failing to gain sustained momentum. The analysis draws upon recent IPO data from India, the United States, the United Arab Emirates, and Saudi Arabia to determine the global prevalence of this trend. Key findings reveal that while high grey market premiums (GMPs) can reflect strong initial investor interest, they do not guarantee successful public market debuts or sustained post-listing performance. Macroeconomic conditions, regulatory environments, and the inherent speculative nature of the grey market contribute to these discrepancies, impacting investor returns across diverse geographies.

II. Introduction: Understanding IPOs and Grey Market Dynamics

The IPO Process and Investor Expectations

An Initial Public Offering (IPO) marks a pivotal transition for a company, moving from private ownership to public trading on a stock exchange. This process allows companies to raise substantial capital from a broader investor base, enhance their public profile, and provide liquidity for early investors and founders. For investors, IPOs traditionally represent an opportunity for significant listing gains, driven by the prospect of acquiring shares at a discounted "issue price" before they are exposed to the wider market's demand. The anticipation of a strong debut often fuels investor enthusiasm, with many hoping to capitalize on immediate price appreciation.

Role and Significance of Grey Market Premium (GMP)

The Grey Market Premium (GMP) is an unofficial valuation that emerges in the unlisted market, where a company's shares are traded informally before their official stock exchange listing. This informal trading provides an early, albeit unregulated, indication of investor demand and the perceived value of the forthcoming shares. For example, if an IPO's issue price is set at ₹100 and its grey market price reaches ₹120, the GMP is ₹20, indicating an expected listing premium.

The GMP serves several functions in the pre-listing phase. It acts as a demand indicator, with a higher premium generally suggesting robust interest and positive market sentiment toward the IPO. It also functions as a market sentiment gauge, reflecting the collective anticipation and excitement surrounding the offering. Investors frequently utilize GMP as a tool for price prediction, attempting to forecast the potential listing price on the official exchange. Furthermore, a declining or negative GMP can serve as an early warning sign, alerting investors to potential risks such as overvaluation, insufficient demand, or a prevailing market pessimism, thereby aiding in investment reassessment and potential loss avoidance.

Factors Influencing GMP and Listing Performance

Several factors interact to influence an IPO's GMP and, consequently, its listing performance:

• Company Reputation and Fundamentals: Companies demonstrating strong financial health, a robust business model, and an established market reputation typically command higher GMPs. Investors are often willing to pay a premium for shares of well-regarded entities.
• Market Sentiment: The prevailing overall market conditions and investor confidence play a significant role. A bullish market environment, characterized by high investor confidence, tends to boost GMPs. Conversely, periods of market volatility or widespread pessimism can depress GMPs, even for fundamentally strong companies.
• Subscription Levels: The degree to which an IPO is oversubscribed during its official bidding period often correlates directly with its GMP. High subscription rates signal strong investor demand, which can drive up the grey market premium.
• Industry Performance: The health and growth prospects of the sector to which the issuing company belongs can also impact its GMP. For instance, a technology IPO is likely to see a higher GMP if the technology sector is performing well generally.

Risks Associated with Grey Market Trading

While trading in the grey market can appear lucrative, it carries substantial risks due to its unofficial nature:

• Lack of Regulation: The grey market operates outside the regulatory oversight of bodies such as SEBI (Securities and Exchange Board of India) or other equivalent financial authorities. This absence of regulation can lead to a lack of transparency and an increased potential for fraudulent activities.
• Price Volatility: Prices in the grey market are highly speculative and prone to extreme volatility. Sudden shifts in investor sentiment or unofficial news can result in significant and rapid price swings.
• No Legal Recourse: Given its unofficial status, participants in grey market transactions have no legal protection or recourse in the event of disputes or fraudulent practices. Any disagreements cannot be legally challenged.

The observation of IPOs exhibiting high unlisted market prices followed by significant discounts upon listing suggests a critical dynamic in investor behavior and market structure. When a high GMP generates widespread investor excitement and a perception of impending gains, it can create a "fear of missing out" (FOMO) among certain investor segments. This speculative demand, particularly from retail investors who may rely heavily on GMP as a primary signal, can artificially inflate the unlisted price to unsustainable levels. However, upon the IPO's transition to the regulated exchange, a different set of market forces comes into play. Institutional investors, who typically conduct more rigorous fundamental analysis and consider broader market realities such as competitive valuations, often apply a more disciplined approach. This often leads to a sharp correction from the inflated speculative premium, resulting in the observed "significant discount upon listing." This phenomenon underscores a fundamental difference in how various investor segments perceive and value an IPO. Retail investors, often more active in the less regulated grey market, might be driven by hype and expectations of quick profits, leading to higher GMPs. In contrast, Qualified Institutional Buyers (QIBs) and Non-Institutional Investors (NIIs) operate under stricter due diligence protocols and typically adopt a more long-term, fundamentally driven valuation approach. The eventual listing price, influenced by institutional bidding and prevailing market conditions, can therefore be significantly lower than the speculative grey market price, revealing an asymmetry in information access, analytical depth, and risk tolerance between these investor groups.

III. The Indian IPO Landscape: High GMP, Discounted Listing, and Post-Listing Consolidation

The Indian IPO market has witnessed numerous instances where initial enthusiasm, reflected in high unlisted market prices, has been met with a more subdued reality upon official listing. This section analyzes specific cases, including those highlighted in the provided image, to illustrate this phenomenon and its implications for investors.

Analysis of IPOs from the Provided Image

The image provided for analysis highlights several Indian IPOs, framing the narrative as "Grey Market said 'To the Moon'... But IPOs said 'Come Down to Earth!'" This directly sets up the phenomenon of high unlisted valuations meeting a discounted reality post-listing.

• UTI AMC (Oct 2020): The image indicates an IPO Price of ₹552-554 and an Unlisted Price (GMP) of ₹1,100. This suggests a substantial implied discount upon listing from the grey market valuation. The IPO price band was indeed ₹550-₹554, with listing occurring on October 12, 2020. While the exact listing price is not explicitly stated in the available information, the stark difference between the unlisted price and the IPO price range aligns with the phenomenon of high pre-market expectations not translating fully to the official listing.
• PB Fintech (Policybazaar) (Nov 2021): The image states an IPO Price of ₹940-980 and an Unlisted Price (GMP) of ₹1,800+, accompanied by the tagline "Insured Dreams, Discounted Reality!" However, a closer examination reveals a crucial contradiction to the premise of being "significantly discounted upon listing" relative to its IPO price. The IPO was priced at ₹980, but it actually listed at ₹1,815.30 on November 15, 2021. This represented a significant premium to both its IPO price and its unlisted price (as per the image's ₹1,800+). The "Discounted Reality" narrative likely referred to its post-listing performance or a decline from its peak trading price, rather than its initial listing performance against the IPO price.
• AGS Transact (Jan 2022): This case perfectly aligns with the query's criteria. The image shows an IPO Price of ₹185-195 and an Unlisted Price (GMP) of ₹550. The IPO was priced at ₹175 and listed on January 31, 2022. On its listing day, the stock closed at ₹161.05, representing a nearly 8% discount from its IPO price. More dramatically, this was a severe discount of over 70% from its unlisted market valuation of ₹550. The post-listing performance has been catastrophic, with the current price plummeting to ₹5.63, a staggering 96.78% below its IPO price. This exemplifies a high unlisted price leading to a significant discount upon listing (both from GMP and IPO price) and subsequent consolidation without momentum, characterized by a massive and sustained decline. Contributing factors included the company's "stagnant topline" and being "expensively priced" compared to peers, alongside being its "4th attempt at IPO".
• Delhivery (May 2022): The image indicates an IPO Price of ₹462-487 and an Unlisted Price (GMP) of ₹900-950. The IPO was indeed priced at ₹487 and listed on May 24, 2022. It closed at ₹536.35 on its listing day, a 10.13% premium to the IPO price. However, this was a substantial discount from its high unlisted price of ₹900-950. The company was noted to be "priced with a negative P/E" due to "continued losses". Retail investor subscription was notably low at 0.57 times, while Qualified Institutional Buyers (QIBs) subscribed 2.66 times. While the stock listed at a premium to its IPO price, the significant drop from its unlisted market valuation makes it a relevant example of the phenomenon, particularly concerning the disconnect between grey market hype and initial public market reality.
• Tata Technologies (Nov 2023): The image lists an IPO Price of ₹475-500 and an Unlisted Price (GMP) of ₹950. However, the IPO was priced at ₹500 and listed at ₹1,199.95, representing a massive 139.99% premium to the IPO price. This listing price was even higher than its last reported GMP of ₹475 (which implied an expected listing of ₹975). This case is a strong contradiction to the query's criteria of being "significantly discounted upon listing," as Tata Technologies experienced a highly successful premium listing.
• Waaree Energies (Oct 2024): The image shows an IPO Price of ₹1,427-1,503 and an Unlisted Price (GMP) of ₹2,700-2,750. The IPO was priced at ₹1503 and opened at ₹2,994.40, a significant premium to both its IPO and unlisted prices. This is another clear contradiction to the query's criteria, as it also achieved a strong premium listing.
• HDB Financial Services (June 2025): The image lists an IPO Price of ₹700-740 and an Unlisted Price (GMP) of ₹1,200-1,250. Based on a GMP of ₹74, a projected listing price of ₹814 (10% above the upper price band of ₹740) was indicated. While projected to list at a premium to its IPO price, this still represents a substantial discount from its unlisted market valuation. Notably, QIBs subscribed 55.47 times, but retail investors showed caution with only 1.41 times subscription, attributed to "post-LIC and Paytm skepticism toward large issuances". The company's profit after tax (PAT) declined in FY24 due to interest rate volatility, which could impact its post-listing momentum, fitting the "consolidated without momentum" aspect.

The Indian IPO market demonstrates a nuanced relationship between grey market premiums and listing performance. The image, with its "Grey Market said 'To the Moon'... But IPOs said 'Come Down to Earth!'" narrative, aptly captures the essence of this phenomenon. Cases like AGS Transact and MVK Agro Food Product explicitly confirm this pattern, where initial high GMPs were followed by discounted listings and poor post-listing performance. However, the examples of Tata Technologies and Waaree Energies, also cited in the image, show massive premium listings. This apparent contradiction suggests that while a high GMP can indicate strong demand, it is not a guarantee of sustained success and can even mislead. This can be understood as a "double-edged sword": while some high GMPs translate into stellar listings, others, particularly if driven purely by speculation or if underlying fundamentals are weak, can lead to significant investor losses. The unregulated nature of the grey market amplifies this unpredictability.

Furthermore, a divergence in subscription rates for IPOs like Delhivery (retail subscription at 0.57x versus QIB at 2.66x) and HDB Financial Services (retail at 1.41x versus QIB at 55.47x) reveals a distinction between retail investor sentiment and institutional prudence. Despite high institutional demand for HDB, retail investors exhibited "caution." This suggests that while retail investors might contribute significantly to high GMPs, reflecting their "to the moon" sentiment, their actual participation in the IPO or their capacity to sustain post-listing momentum may be limited by factors such as "skepticism toward large issuances" or a more cautious approach when confronted with official valuations. This implies that the grey market, heavily influenced by retail sentiment, may not accurately reflect the broader market's, particularly institutional investors', appetite or fundamental valuation. The "discounted reality" often represents the market's collective, more rational assessment overriding initial retail exuberance.

Other Notable Indian IPOs Exhibiting the Phenomenon (2022-2024)

Beyond the direct examples from the image, several other Indian IPOs in recent years have displayed similar patterns of high unlisted market prices (or strong initial market sentiment) followed by discounted listings and subsequent lack of momentum:

• MVK Agro Food Product Ltd. (SME, Mar 2024): This SME IPO provides a textbook example of the phenomenon. Its issue price was ₹120, but it listed at ₹79, a significant 34.17% discount. The stock's current price is ₹40.70, representing a substantial decline from its IPO price. Critically, its grey market premium initially reached ₹30 (implying an expected listing of ₹150 on an IPO price of ₹120), but this quickly declined to ₹5 before listing (implying an expected listing of ₹125). This case clearly illustrates how rapidly grey market sentiment can shift and the severe consequences for investors if the market's true assessment differs drastically from speculative pre-listing valuations.
• R K Swamy Ltd (Mainboard, Mar 2024): With an issue price of ₹288, this company listed at ₹250, a 13.19% discount. Its current price is ₹267.16. The company had a history of "negative cash flows in the past".
• Sula Vineyards Limited (Mainboard, Dec 2022): This IPO, with an issue price of ₹357, listed at ₹331.15, a 7.24% discount. Its current price is ₹303.15, a 15.08% decline from its IPO price.
• Fusion Micro Finance Limited (Mainboard, Nov 2022): Priced at ₹368, it listed at ₹324.80, an 11.74% discount. The stock has since fallen significantly to ₹205.90, a 44.05% decline from its IPO price.
• Life Insurance Corporation of India (LIC) (Mainboard, May 2022): A highly anticipated IPO, LIC was priced at ₹949 but listed at ₹875.25, a 7.77% discount. Its current price of ₹941.15 still represents a marginal loss from its IPO price.
• Indifra Limited (SME, Dec 2023): While it listed at a small premium (5.23% gain from ₹65 to ₹68.40), its subsequent performance has been poor, with the current price at ₹21.10, a 67.54% decline from its IPO price. This fits the "consolidated without momentum" aspect of the query.
• Graphisads Limited (SME, Dec 2023): Priced at ₹111, it listed at ₹105.95, a 4.55% discount. The stock has since fallen to ₹40.90, a 63.15% decline.
• Micropro Software Solutions Limited (SME, Nov 2023): With an issue price of ₹81, it listed at ₹76.00, a 6.17% discount. Its current price is ₹24.50, a 69.75% decline.
• Sunrest Lifescience Limited (SME, Nov 2023): Priced at ₹84, it listed at ₹79.80, a 5.00% discount. The current price is ₹54.00, a 35.71% decline.
• Baba Food Processing India Limited (SME, Nov 2023): This IPO was priced at ₹76 and listed at ₹72.20, a 5.00% discount. Its current price is ₹38.00, a 50.00% decline.

Case Studies: Deep Dive into Select Indian IPOs

AGS Transact Technologies Ltd.: This case is a quintessential example of the phenomenon under investigation. Despite a reported high unlisted price of ₹550 in the grey market, its IPO was officially priced at ₹175. Upon listing, the stock debuted at ₹161.05, representing a discount of nearly 8% from its IPO price and a substantial 70.7% discount from its grey market valuation. The post-listing trajectory has been severely negative, with the stock plummeting over 96% from its IPO price to a current value of ₹5.63. The underlying reasons for this performance include a "stagnant topline" and an "expensively priced" valuation relative to its peers. Furthermore, the fact that this was the company's "4th attempt at IPO" since 2010 indicates persistent underlying business concerns that the initial grey market enthusiasm failed to adequately account for.

MVK Agro Food Product Ltd.: This SME IPO offers a clear illustration of how rapidly grey market sentiment can shift and its severe impact on listing performance. The grey market premium for MVK Agro Food initially reached ₹30 (implying an expected listing of ₹150 on an IPO price of ₹120) but subsequently declined to ₹5 before the actual listing. Upon listing, the stock debuted at ₹79, a significant 34.17% discount from its IPO price, and even further below any reported GMP. The stock has continued its downward trajectory, currently trading at ₹40.70, representing a substantial decline from its IPO price. This case highlights the precarious nature of relying solely on unofficial market indicators, as the market's true assessment can drastically diverge from speculative pre-listing valuations.

HDB Financial Services (Projected): While a future IPO (June 2025), its current dynamics are highly illustrative of the phenomenon. The unlisted market price for HDB Financial Services has been reported at ₹1,200-1,250, significantly higher than its IPO price band of ₹700-740. While it is projected to list at a premium to its IPO price (approximately ₹814 based on a GMP of ₹74), this still represents a substantial discount from its unlisted market valuation. The observed "retail caution" in subscription (1.41 times for retail vs. 55.47 times for QIBs) and a reported "PAT decline due to interest rate volatility" in FY24 suggest potential for limited post-listing momentum. This aligns with the "consolidated without momentum" aspect, as fundamental concerns and broader market sentiment may temper initial speculative enthusiasm.

Table 1: Key Indian IPOs with High Unlisted Market Prices, Listing Discrepancies, and Post-Listing Trajectories (2020-2025)

IV. The Global Context: US IPOs and Post-Listing Performance

The phenomenon of high pre-listing valuations being followed by discounted listings and a lack of momentum is not confined to the Indian market; it is a global trend, particularly evident in the United States.

Overview of US IPO Market Trends (2022-2024)

The US IPO market experienced a significant deceleration following the boom observed during the pandemic era. This slowdown was marked by several key indicators:

• In 2023, half of all IPOs were classified as "broken IPOs," meaning their stock closed below the offering price on the first trading day. This represented the highest proportion since 2008 and a notable increase from 37% in 2022.
• A substantial majority of IPOs struggled in the aftermarket. By the end of 2023, 73% of companies that went public that year were trading below their offering price, a slight improvement from 80% in 2022.
• The median offering size for IPOs in 2023 ($10.0 million) and 2022 ($17.6 million) was considerably smaller than the median observed during the pre-pandemic period (2017-2021 median of $144.2 million). This indicates a more cautious market environment and a shift towards smaller offerings.
• Technology IPOs were particularly affected, with these companies ending 2023 a median of 62% below their offering price.
• Despite these challenges, there was some cautious optimism. The aftermarket performance of larger IPOs (those raising over $100 million) from the 2023 vintage showed some improvement compared to the 2022 cohort, hinting at a potential recovery in 2024.

The widespread underperformance of US IPOs can be attributed primarily to macroeconomic headwinds. The high percentage of "broken IPOs" and significant year-end declines point to a systemic market recalibration rather than isolated company-specific issues. This is intrinsically linked to ongoing macroeconomic and geopolitical uncertainties, including sustained high interest rates. Elevated interest rates increase the cost of capital for companies, reduce the present value of future earnings (a particular challenge for growth-oriented companies often seeking IPOs), and make less risky fixed-income investments more attractive, thereby diverting capital away from equities, especially riskier new listings. This broader economic environment can override individual company strengths and pre-IPO valuations, leading to widespread underperformance.

An additional aspect of this phenomenon in the US market is the "moonshot" illusion. While some IPOs achieve spectacular initial gains, doubling their stock price on the opening day, these "moonshots" often prove unsustainable. For instance, out of six such IPOs in 2023, five ended the year down a median of 83% from their offering price. This demonstrates that even if an IPO achieves an initial massive premium (akin to a "high unlisted market price" in its initial public trading), this momentum is frequently fleeting. The subsequent sharp decline fulfills the "significantly discounted upon listing" (from the initial trading peak) and "consolidated without momentum" aspects of the query, even if the initial IPO price was met or exceeded. This highlights that initial public market enthusiasm can be as fleeting and speculative as grey market premiums, and a high opening price does not guarantee long-term success.

Identification of US IPOs with Significant Listing Discounts and Underperformance (2023)

Several US IPOs in 2023 demonstrated significant listing discounts or severe post-listing underperformance, aligning with the pattern observed in India:

• Instacart, Inc. (Maplebear Inc.): This highly anticipated IPO was trading nearly 20% below its IPO price as of January 2, 2024.
• Healthcare Companies: A cluster of healthcare companies, including Turnstone Biologics Corp., Sagimet Biosciences Inc., ACELYRIN, Inc., and Mineralys Therapeutics, Inc., were all trading at least 45% below their IPO prices by early 2024.
• U Power Limited (UCAR): This Chinese EV battery company experienced an initial surge of 1,100% upon its Nasdaq listing, but then plummeted due to regulatory restrictions in China, ending 2023 down 97%. Its 52-week range shows a high of $9.4343 and a low of $2.3001. This exemplifies high initial valuation followed by a severe discount and lack of momentum.
• Lucy Scientific Discovery (LSDIF): An early-stage psychotropics company, it ended 2023 down 94% from its IPO price. Its stock price has since seen an astonishing 99.97% decrease in the last 52 weeks, trading around $0.0002, a stark contrast to its IPO price of $4.00 per share.
• Mangoceuticals (MGRX): This online retailer of erectile dysfunction treatments ended 2023 down 93%. Its current price is around $1.49, significantly below its IPO price of $5.00.
• Surf Air Mobility (SRFM): An electric aviation company, it ended 2023 down 92%. The stock currently trades around $4.10, having experienced a 52-week range of $0.90-$6.72. It recently closed a direct offering at $2.50 per share.
• Hanryu Holdings (HRYU): This media company ended 2023 down 92%. Its current share price is $0.288, a sharp decline from its IPO price of $10.00 per share.
• VS Media Holdings (VSME): Also in the media sector, it ended 2023 down 92%. While its current price fluctuates, it recently conducted a public offering at $0.229 per share, indicating a very low valuation.
• Warrantee Inc. (WRNT): This Japanese marketing technology firm ended 2023 down 92%. Its current ADR price is $0.2716, far below its IPO price of $4.00 per share.
• The NFT Gaming Company (NFTG): This company ended 2023 down 92%. Its stock currently trades around $1.49-$1.65.
• Inspire Veterinary Partners (IVP): This healthcare company ended 2023 down 92%. Its current price is $1.44, a significant decline from its IPO date of August 30, 2023.
• MGO Global (MGOL): This fashion company ended 2023 down 91%. Its IPO was priced at $5.00, and it currently trades around $1.49.

Table 2: Notable US IPOs with Listing Discrepancies and Underperformance (2022-2024)

V. The Middle East Perspective: UAE and Saudi Arabian IPOs

The IPO market in the Middle East, particularly in the UAE and Saudi Arabia, has shown distinct dynamics in recent years, presenting both strong activity and instances of underperformance post-listing, similar to global trends.

Recent IPO Activity and Market Dynamics (2022-2024)

Despite a generally subdued global IPO market in 2023, the Middle East, alongside India and Indonesia, emerged as a "bright spot" with robust issuance activity. The UAE and Saudi Arabia have particularly solidified their positions as leading venues for IPO activity within the Europe, Middle East, and Africa (EMEA) region.

Saudi Arabia led the GCC IPO market in 2024, contributing to 42 out of 53 IPOs in the region and securing the seventh spot globally for total IPO proceeds, amounting to $4.1 billion. This strong performance highlights the Kingdom's dominant role and the resilience of its capital markets, driven by strong local investor demand despite external challenges.

The UAE, while leading the region in IPO proceeds in 2024 with $6.2 billion, saw its share of total GCC IPO proceeds decline from 56.3% in 2023 to 47.8% in 2024. The UAE IPO market experienced a "notable cooling" from its record-breaking year in 2022, which saw 11 IPOs raising $13 billion. The combined proceeds for 2023 and 2024 were less than half of the 2022 figures. This suggests that while the region remains active, the scale of individual offerings and overall market exuberance has moderated since the peak.

Performance of Key IPOs

Several prominent IPOs in the UAE and Saudi Arabia illustrate the varied outcomes, including cases where high demand did not translate into sustained post-listing momentum:

• DEWA (Dubai Electricity and Water Authority): This state-backed entity raised a substantial $6.1 billion from its IPO in 2022. While its stock has shown a 21.30% increase over the last year, it also reached an all-time low of 2.20 AED in June 2024. Furthermore, its initial earnings report showed a significant negative surprise of -45.33%, and its net income experienced a nearly 70% quarter-on-quarter drop in one instance. This indicates that even large, strategically important IPOs can undergo periods of significant decline or consolidation after their listing, despite initial market interest and capital raised.
• Talabat Holding plc: This food delivery company's 2024 IPO on the Dubai Financial Market (DFM) raised $2 billion. The offering was met with "strong subscription," with books covered at the top of the range within half an hour. However, its shares "fell in debut trading," opening with a 6.25% jump but then plummeting to close 13% below its opening price and below its offer price. The stock has since seen a 20.00% decrease over the last year, reaching an all-time low of 1.22 AED in April 2025. This is a prime example where high pre-listing demand and oversubscription did not prevent a discounted listing and subsequent lack of momentum.
• Lulu Retail Holdings PLC: This hypermarket chain raised $1.72 billion in November 2024, with its IPO being oversubscribed more than 25 times. Despite this strong demand, its stock has experienced a 38.24% decrease over the last year, reaching an all-time low of 1.09 AED in June 2025. The initial high hopes for good returns from this stock were not met, as it did "exactly the opposite".
• Dr. Soliman Abdel Kader Fakeeh Hospital Company (Saudi Arabia): This healthcare provider's IPO in 2024 was the largest in Saudi Arabia for the year, raising approximately $763 million. It was significantly oversubscribed, drawing $91 billion in orders (119 times oversubscribed). However, its stock performance has seen a 29.0% decline over the last year. This demonstrates that even in a market with robust local investor demand and high oversubscription rates, post-listing performance can be disappointing, leading to consolidation without upward momentum.

VI. Conclusion

The phenomenon of IPOs exhibiting high unlisted market prices but experiencing significant discounts upon listing and subsequently consolidating without momentum is a global occurrence, not specific to any single market. Evidence from India, the United States, the UAE, and Saudi Arabia consistently reveals this pattern across diverse economic and regulatory landscapes.

In India, while the "Grey Market Premium" often signals strong investor anticipation, it is not a definitive predictor of listing success or sustained post-listing performance. Cases like AGS Transact and MVK Agro Food Product demonstrate a clear disconnect where speculative grey market valuations are severely corrected upon official listing, leading to substantial investor losses. This underscores the unregulated nature and inherent volatility of the grey market, which can be a double-edged sword for investors. Furthermore, the divergence in subscription rates between retail and institutional investors for some IPOs suggests that retail enthusiasm, which often fuels high GMPs, may not align with the more prudent, fundamentally driven valuations of institutional players.

The US market provides compelling evidence of this global trend, particularly in the post-pandemic period. A high percentage of "broken IPOs" and significant year-end declines for many listings were directly influenced by macroeconomic headwinds, such as sustained high interest rates. Even "moonshot" IPOs, which saw spectacular initial gains, often failed to sustain momentum, highlighting that initial public market exuberance can be as fleeting as grey market premiums.

In the Middle East, particularly the UAE and Saudi Arabia, strong IPO activity and high oversubscription rates have been observed. However, even in these buoyant markets, prominent listings like Talabat and Lulu Retail have experienced significant declines post-debut, despite initial high demand. This indicates that while regional markets are attracting substantial capital, the long-term performance of new listings is subject to market realities and fundamental valuations that may differ from initial investor enthusiasm.

Overall, the analysis confirms that the disconnect between pre-listing market sentiment and post-listing performance is a pervasive challenge in the global IPO landscape. Investors are advised to exercise caution and conduct thorough due diligence beyond unofficial market indicators like GMP. A comprehensive assessment of company fundamentals, industry outlook, and prevailing macroeconomic conditions is crucial, as initial speculative premiums, whether in the grey market or immediately post-listing, do not guarantee sustained positive momentum. The "discounted reality" upon listing and subsequent consolidation without momentum is a stark reminder that market fundamentals ultimately dictate long-term performance.