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Investment bankers always try to price IPOs just below what they believe the fair value to be in order to provide a return to incentivise

Investment bankers always try to price IPOs just below what they believe the fair value to be in order to provide a return to incentivise investors to take the initial risk of buying a brand new listing's stock. If the market always believes IPOs are slightly underpriced, then it is easier to promote new stocks and place them with institutional investors and have oversubscribed placements for future IPOs.

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