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What is the grey market premium in IPO?

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The grey market premium is the price at which the IPO shares are traded on the IPO grey market.

The grey market premium helps predict the IPO listing price and is commonly known as the GMP.

For example, the IPO issue price of XYZ Ltd. is Rs. 100-105 and the GMP is Rs. 60, which means that a grey market investor is willing to pay Rs 60 per share more than the issue price of Rs 100-105 and buy the IPO shares at Rs 160 to 165 rupees.

 

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