One of the most frequent questions we're asked by advisers considering an IPO for a new listed product is "Will this product list at a discount?" The question applies to ordinary shares as well as listed alternative assets, and listed structured products. No doubt, the concern stems from the rash of listed investment companies (LICs) listed at the end of 2003, some of which continue to trade at a discount to their net asset value today.

For the adviser, the discount shows as a loss on revaluation, and it raises the awkward question - should investors sell now and realise a loss, or hang in there with potentially worse to come?

To answer this...