Original Articles

An analysis of underpricing and aftermarket performance of initial public offerings on the Alternative Exchange (AltX)


This paper reviews the international evidence of underpricing of Initial Public Offerings and analyses IPO underpricing by companies listing on the South African Alternative Exchange (AltX). Underpricing is indicated by measuring the percentage difference between the initial offer price and the closing market price on the first day of trading. Underpricing is costly to the pre-issue shareholders. However, studies have reported significant long run underperformance of investing in IPO listings. The objective of this study is to test whether new listings on the AltX are subject to underpricing and measure the level of such underpricing as well to measure the aftermarket performance of investing in new listings on the AltX.

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