The period 2000-2013 witnessed a tremendous rise in investor participation in IPOs in Kenya. A number of IPOs have resulted in over-subscription. Outstanding cases include; Kenya-Re (334%), Kengen (236%), Eveready (800%), Safaricom (363%), Mumias Sugar (200%), Access Kenya (300%), Scan Group (520%) and Telkom (300%). The purpose of this study was to empirically investigate factors influencing investor behavior towards IPOs in Kenya. The study had, as its target population people residing in Kenya who have previously participated in any one or more of the following IPOs; Mumias Sugar, Safricom, Kengen, Telkom, Eveready, Kenya- Re, Access Kenya, and Scan Group. Simple Random Sampling was used to select a sample of respondents from the target population. Factor Analysis was used to analyze data collected from the respondents to generate understanding of the main motivation to the hightened interest in IPOs by investors. A number of factors thought to be driving investor’s interests towards initial public offers in Kenya were identified. These factors were conveniently categorized into three in order of significance, general state of the economy, confidant’s opinions, and leading communication from government sources.

The period 2000-2013 witnessed a tremendous rise in investor participation in IPOs in Kenya. During this period a number of IPOs resulted in over-subscription. Outstanding cases include; Kenya-Re (334%), Kengen (236%), Eveready (800%), Safaricom (363%), Mumias Sugar (200%), Access Kenya (300%), Scan Group (520%) and Telkom (300%). Stock market returns are highly unpredictable and volatile, making investment in IPOs a potentially risky affair. The purpose of this paper is to determine whether or not investor behaviour in Kenya is consistent with Harry Markowitz's (the H-M) risk-return theory. The first part of this paper seeks to look at the basic tenets of the H-M theory. In the last part of the paper, the actual behaviour of investors towards IPOs in Kenya is surveyed against the standard practice as Indexed African Journals Online: www.ajol.info Indexed Society of African Journals Editors (SAJE); https://africaneditors.org/ espoused by the H-M model. This paper concluded that the H-M model does not apply in the Kenyan case. Other factors besides risk and return appear to be influencing investor behaviour towards IPOs in Kenya signalling the need for the remodelling of the H-M model to include these additional factors. Findings by this paper may be valuable to investment policy makers in government and other players in Kenya's financial markets. Scholars also will also benefit from this paper's findings by having their knowledge on investment decision-making broadened.