As the resurgence of initial public offerings signals strength in equities, experts urge investors to remain disciplined and scrutinise structural risks amid sector diversification and valuation concerns.
The recent recovery in initial public offerings is reopening a route into fast-growing technology companies, but Mickey Ganguly of CIBC Global Asset Management says investors should resist the temptation to chase every new listing. In an interview on Aug. 4, Ganguly said a healthy IPO market can signal strength in equities, but only if investors stay disciplined and weigh the structural risks that excitement can obscure.
That caution matters because IPO pricing is still as much about market psychology as hard numbers. Research on how flotations are priced shows underwriters rely on book-building, comparable companies and investor demand, while the final offer can also reflect private-market negotiations that are not always visible to public buyers. PwC said the US IPO market extended its rebound in the second quarter of 2026, with broader sector participation and stronger liquidity conditions, although fundraising remains below historical norms.
Ganguly starts by judging the market itself. He looks for solid demand, repeated oversubscription, healthy private funding before listing and meaningful institutional support from pension funds, sovereign wealth funds and mutual funds. He also warns that speculative enthusiasm without earnings support, a weaker macro backdrop and lock-up expiries that allow early backers to sell can all lead to volatility after a stock begins trading.
Once the broader setting looks favourable, he turns to the business. Because newly listed companies lack a long public record, Ganguly said the burden of proof is higher than for mature listed firms. He focuses first on whether a company has a durable competitive edge, then on the size of the addressable market, the quality of the entry valuation and the strength of governance. Dual-class share structures and concentrated ownership, he said, can limit accountability for minority investors.
The opportunity set, in his view, extends beyond headline-grabbing artificial intelligence names. PwC said AI remains central to venture activity, but Ganguly is also interested in the infrastructure needed to support the build-out, including chips, compute, energy and networking. He also sees promise in enterprise software companies that are embedding AI in ways that create switching costs and measurable productivity gains, as well as newly public firms that could become takeover targets if merger activity stays brisk. For investors, the message is simple: the IPO market may be improving, but a clear process still matters more than the buzz around any single debut.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
