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What is a Failed IPO?

A failed IPO is when a company tries to sell its shares to the public for the first time, but investors are not interested enough to buy them. Because of this low demand, the IPO does not succeed as expected.

An IPO is generally considered a failure when:

  1. The IPO doesn’t get enough subscriptions: If investors - retail, HNI, or institutional do not apply for enough shares, the company cannot raise the money it planned. This is the most common sign of a failed IPO.
  1. The company withdraws or postpones the IPO: If demand is too weak or conditions are unfavourable, the company may stop the IPO process. This is also treated as a failed attempt.
  1. The share lists below the issue price and stays weak: If the stock falls below the issue price on listing and fails to recover, it indicates the market does not agree with the company’s valuation. This is also viewed as a failed IPO in practical terms.