The Post offering performance of IPOs from the banking industry

Abstract

This paper concentrates on IPOs from the banking sector. The recommendations of the expert committees on the banking sector reform encouraged Indian banks to raise funds from the capital market through IPOs. In a developing country, the role of the banking sector for economic development is undisputed. In view of its importance in economic resource allocation and empirical evidences of IPO under performance in the developing countries in the background, this paper analyses the banking sector IPOs in detail. The performance evaluations on the basis of stock returns didn’t find significant evidences of underperformance for the IPOs from the banking sector. Moreover, the study based on key accounting parameters showed improvement in the performance of the banks in the post listing period. There were no significant differences across ownership groups (public sector banks vis-à-vis their private counterpart) in the IPO pricing and performance.