Over 40 pc of pre-IPO investors generated positive alpha from new-age firms in 5 years

New Delhi, Aug 13 (IANS) Almost 43 per cent of pre-IPO investors in the past five years generated a positive alpha from new-age companies, a report said on Wednesday.

Alpha is a measure of an investment's performance that indicates its ability to generate returns in excess of its benchmark.

Analysis of 25 new-age companies revealed 9 out of 21 companies yielded positive alpha for such investors. Almost 36 per cent of IPO investors and 32 per cent of post-IPO investors generated a positive alpha over the past five years, a report from wealth management firm Client Associates (CA) said.

Twenty-five companies across fintech, logistics, consumer internet, quick commerce, and SaaS that hit the public market during this period were analysed for the report.

Client Associates (CA) found that 11 out of 21 companies (52 per cent) delivered positive alpha at the six-month lock-in expiry, suggesting this window presented the best exit opportunity.

Average IPO subscription stood at 48.5x, with 68 per cent (17 out of 25) delivering listing gains averaging 24.15 per cent. However, these gains were largely fleeting, as only 36 per cent of IPOs recorded long-term outperformance.

A plethora of tech-led companies — fuelled by digital adoption, favourable demographics, and strong capital inflows — have entered public markets in the last five years, shifting the IPO landscape away from its traditional industrial and BFSI roots, the report said.

This transition coincided with unprecedented liquidity, speculative retail participation, and a narrative-driven investing cycle, where business fundamentals were often sidelined, it further said.

While companies like Ixigo and Zaggle generated exceptional alpha of 89.29 per cent and 62.47 per cent, respectively, others like Ola Electric saw significant value erosion, dipping 60.13 per cent.

Tech-enabled companies with monetisation clarity (like Zomato, Nazara) outperformed capital-heavy or unfocused models.

Nitin Aggarwal, Director Investment Research and Advisory at Client Associates, said, "Our analysis shows that while listing gains rewarded early risk-takers, sustained outperformance was reserved for companies built on solid fundamentals.”

Post-IPO investors emerged as the most disadvantaged group, with merely 8 of 25 companies (32 per cent) delivering positive alpha. This category reflects market efficiency and business fundamentals most accurately. For this segment, the listing price often reflected a valuation peak, rather than the beginning of sustained growth. Only 32 per cent of companies generated long-term outperformance, highlighting the challenge of identifying winners after the hype fades.

--IANS

aar/na