Sunday, 22 July 2007

How to increase your probability of get IPO shares from the public tranche

Let's do an interesting topic today on how to increase your chances of getting some shares from the IPO public tranche.

It is always relatively easier to get IPO shares when sentiments are weak and very diffcult to get IPO shares when sentiments are hot and that is what is happening right now! The proportion of shares allocated to the public tranche are so pathetic that it is almost always certain that you will waste your $2 application fees. Dont you get frustrated when you know you have wasted that $2 again at the ATM applying for IPO shares? So what are some of the tips to increase your chances of getting the IPO from the public tranche? (we will talk about how to lay your hands on the placement tranche another day).





(The above is the allocation table for Wanxiang IPO)


According to the listing manual chapter 2, the Company going for listing must have at least 1,000 public shareholders for a Mainboard listing and at least 500 public shareholders for a SESDAQ listing. The listing company will try to meet the minumum number of sharesholders from its placement tranche, as such the public tranche is more for 'show' as well as to truly ensure that the shareholders are truly independent and 'not-related' to the Company. These are the following things which you can do to increase your chances for the public tranche:


No.1 - Apply for at least 50,000 shares but the optimal will be 100,000 shares.


From the IPO allocation table above, you can see that more than 70% of the public tranche are allocated to this group of IPO applicants and that this group has the highest probability of getting the shares versus the rest. In addition, you will usually get a 'decent' allocation of about 3k-8k shares, which makes it more 'worthwhile' than those who get 1k or 2k shares.


No.2 - Use as many different CDP accounts as you can to apply for the shares.


Another way will be to gain access to the CDP/ATM accounts of family and relatives who don't buy the IPO shares and use their accounts to apply for the shares. By using 4 to 5 accounts to apply for the IPO shares, you definitely stand a better chance of getting the IPO allotment. Do note that it is an offence to make multiple applications for IPO shares using the same CDP account, so dont ever do it.


No.3 - Borrow $ for a few days to increase your chances.


If the IPO is really hot, you may consider getting interest free loans from family or relatives to increase your chances of getting the IPO shares just for a few days. Many years ago, our local banks provides "IPO Financing" to help increase your chances but this scheme has since been scrapped. You will have to use your 'overdraft' facilities if you do not have access to 'interest-free' loans.



No.4 - Apply for the shares on the closing date and as close to the closing time as possible (not scientifically proven).


There is a hearsay that if you apply on the IPO closing day and as close to the IPO closing time (usually 12pm), your chances of getting the shares will be higher. This is however, not scientifically proven but it may hold some ground on the basis that if you apply the shares on the last day, you only 'lose' interest income for 2 days before the money is returned to you. In addition, you never know if the IPO allocation programme logic is indeed flawed and favour those who applied on the closing day. Why not you try this method and let me know if your chances has improved but the risk is that you might forget to apply for the IPO or miss the 12pm deadline.


No.5 - Never give up.

Sometimes we give up after a few times but you never know when your lucky stars will shine again. My motto is 'never give up' and you might just be rewarded for your persistance and perserverance.

Good Luck and you may just get it on your next try.

(If you find this lesson useful, do drop me your comments so that i know what to focus on in my next lesson).

11 comments:

Anonymous said...

nice writeup thanks!

2Y Capital said...

You are most welcome :)

Anonymous said...

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Anonymous said...

Does DBS/Maybank offers IPO application via their online portal rather than going for ATM?

Thanks!

Anonymous said...

Yes DBS offers IPO application through IBANKing.

Hmmmm I tried to apply last day. But did not get any lots...

Thank u for sharing!

suhaw said...

Whatever you do, don't apply through more than one bank as multiple applications are automatically rejected.

patrick said...

Mr IPO, can I know that the share allocated to public tranche will depend whether you are Singaporean, Singapore PR, etc?

As far as I know in Malaysia, they will divide it into bumi and non-bumi.
While the bumi mostly got higher chance to allocate the share as compare to non-bumi.

Thanks a lot.

Peter Chua said...

Hi Mr.IPO,
Talking about chances assuming you plan for 50k to get a better chance next question is - is it better chance using ATm or online banking to apply? Thanks.

Mr. IPO said...

Haha I hope not! I use online banking all the time.

Anonymous said...

Hi Mr IPO,

I've 2 CDP accounts, one is myself & another one is joint account with my father.
Can I use 2 CDP account to apply for same IPO? is this consider illegal?

Thanks.

Mr. IPO said...

If you use your father’s ATM or internet banking to apply for the IPO, then ok. If you use your ATM and try to apply with the Yeo CDP accounts, then it’s illegal.

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