NSE's long-awaited IPO may turn into a reality check for some investors who bought the exchange’s shares in the unlisted market at higher prices before the public issue. One such case is Mahesh Gupta, who is selling up to 500 equity shares in the NSE IPO. According to the offer documents, he had acquired the shares at Rs 1,826.85 each. The upper end of NSE's IPO price band is Rs 1,785, which is Rs 41.85 lower than his acquisition price.
If all 500 shares are sold at the upper price band, the price difference would work out to about Rs 20,925. In percentage terms, the IPO price is about 2.3% lower than his acquisition cost. The amount may look small in Gupta’s case because the quantity is limited. But the example shows a larger issue for investors in the unlisted market: the price at which a stock trades before an IPO may not always be the price at which it comes to the public market.
