This question has haunted us for many years; whether it is better to invest through IPOs or through the secondary markets. Before the advent of demat, there was a unique benefit of investing in IPOs. Most secondary markets purchases had to be done in minimum basic lot sizes. Hence equity purchases were outside the ambit of most small and retail investors. The only way out was through the IPO route wherein one would be able to participate in equities even with a small investment. But, all that changed with the advent of dematerialization. The demat system got rid of the concept of lots and it was possible to even buy or sell 1 share of any listed company. Hence investment size was no longer a major constraint to investing in secondary markets.

In the last two years, the IPO euphoria is back in India after a long gap of over 6 years. During the fiscal year 2016-17, nearly $2 billion was raised through IPOs while the fiscal year 2017-18 is likely to see more than $6 billion being raised. But with IPOs getting substantially oversubscribed, the question is whether it still makes sense to look at IPOs. The answer is that it does. Here is why!