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Trainline shares might not yield cheap returns

The Trainline IPO looks like a classic private equity IPO where value is maximised for the selling shareholder at the expense of new investors
Trainline shares might not yield cheap returns

I have a very simple rule when it comes to investing in stock market flotations, or initial public offerings (IPOs) as they are often called: don’t think of buying in unless the government is the selling shareholder, and stay away from everything else.

Following this rule will keep you out of some shares that can make you a fortune. But more often than not, it will keep you away from poor companies, or ones that are wildly overpriced; the ones that can leave investors nursing big losses.

In days gone by, the sponsoring broker(s) of an IPO used to see it as a key undertaking to ensure that there was a decent aftermarket in the shares once they had been listed on the stock exchange. In very simple terms, this meant leaving some money on the table for the new buyers of the shares.

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