Saturday, 10 August 2013

How can you get Placement Shares - Part II

I received enough private emails and public comments on how i managed to get placement shares. Since it's National Day Celebration, i will do an update post to the earlier one I did on 6 Aug 2007 where i shared 5 tips to increase your probability. Wow, it has been more than 6 years but that post is still relevant! Anyway, the update post.

Tip 1: Stick to the core brokerage houses.

This is no rocket science. Open your brokerage accounts with the following brokerage firms:
  • DBS Securities
  • UOB Kay Hian
  • OCBC Securities
  • CIMB
DBS is almost always the first stop for underwriting for most IPOs. However, they are very selective and will only do the bigger IPOs. Hence, you will definitely see their names on the bigger cap IPOs such as REITs etc. If i want a brokerage account, i will go for DBS.

UOB will focus on the smaller cap IPOs and have started to be active in the Catalist space as well. PrimePartners like to work with UOBKH to place out their shares for Catalist listings. A recent example will be Moneymax. There used to be a few teams doing IPOs at UOBKH but D&H team has since left and there are 2 teams remaining.

Frankly, I am surprised to see OCBC back in the game this year. They co-underwrite and did the placement tranche of SPH REIT, OUE HT and the upcoming Soildbuild REIT. I recently called my OCBC broker to ask about Soilbuild REIT but in the end, didn't make any indication. I have not been trading through OCBC so i think the chances of getting will be low anyway (plus i am half-hearted about the industrial REIT).

I was pretty disappointed with CIMB. They did a small listing of Singapore Kitchen Equipment and has zero post-market support. Given that it was a small float, investors who were "bitten" will now be extra wary of their IPOs.

Tip 2: You don't have to stick to one dealer or remisier



If i show you my CDP statement, you can see a long list of brokerage accounts. Some are active but others became inactive over time. I tend to "reward" accounts that gave me IPO placement shares. 

In addition, you don't have to stick to one dealer or remisier. It is okay to have different accounts within the same brokerage firm. They understand. I have a few UOBKH accounts (no less helped by the consolidation back in the late 90s and early 2000s). However, not all dealers and remisiers will be able to get you placement shares. We will come to that in a short while.

Tip 3: Knowing the right people


This one i cannot help you. You have to know the right people i.e., the people who "control" the placement book. I happen to know a few of them but i am not "big enough" to underwrite the shares so they will give me some small allocation of placement shares out of goodwill. hahaha. You will need to build your own network and i do spend a lot of time networking on a personal basis.  

As such, if your broker controls the book or knows the people who controls the book, they will be in a better position to help you get some placement shares. 

Tip 4: Become a private banking client


If you have the means and source to become a private banking client, being the preferred client at DBS private bank or some of the foreign banks like Credit Suisse, Goldman, Deutsche or Standard Chartered might be able to help you lay your hands on placement shares. 

Contrary to what you may think :P, i do not have private bankers serving me. I am definitely too "small fry" for them plus I don't want to take away the thrill of managing my own money. ^_^ Private bankers will probably knock on your doors only if you have $1m investible cash.

Tip 5: Tell the broker you are keen to take placement shares and join the "IPO club" if there is one



The idea of an IPO club is you support the IPO regardless of whether you like the company or not. In other words, whenever there is an IPO, you have to "eat it". 

While theoretically, this may sound risky, in reality, it is actually not that bad. This is because the banks will only launch an IPO when sentiments are good and when the placement shares are fully placed out. The IPO club is usually to meet the 1,000 shareholders rule.However, having said that, it is true that they dump more shares on you when the demand is weak but give you "peanut number" of shares when the IPO is hot. As a result, you can actually receive more shares from the public tranche than via the IPO club when the IPO market is hot.

Hope this 5 tips are relevant and useful to you. 

Happy IPOing.

11 comments:

Anonymous said...

Dear Mr IPO, APTT announced that they giving 4.8 cents of dividend for the period 29 May to 30th June. Is it expected to be so much all the while when they launch the IPO? I thought they will only give 1/6 of 4.8 cents since 29/5 to 30/6 is only about a month. Thanks!

Mr. IPO said...

I can't remember liao though I vaguely remember they are doing something like that. Ie take the IPO proceeds and paying back some as distributions.

Anonymous said...

The dividend pertains to income earned from 1 Jan to 30 Jun. They did not distribute the income earned from 1 Jan to 30 April to the previous shareholders before they IPO.

Anonymous said...



This article from Mr IPO has many references to brokers and remisers :

a. if your broker controls the book or knows the people who controls the book, they will be in a better position to help you get some placement shares.

b. I recently called my OCBC broker to ask about Soilbuild REIT but in the end, didn't make any indication


c. you don't have to stick to one dealer or remisier. It is okay to have different accounts within the same brokerage firm


=============================


I want to ask a few questions.

Why do I require a remisier at all? Apart from getting IPO shares, and placement of bonds, why do I require a remisier at all?

Every $1000 in commission I pay, how much goes to the remisier? And for what?


Even if you are the type that only pays $25 in commission every year (eg low trading), why are you paying the remisier anything?

If my (your?) credit standing is equal to, or probably exceeds that of the remisier, then why do I need any remisiers to guarantee any of my trades?

In short, why do I find it impossible to get rid of the remisiers, and why are the remisiers in my way?

How much am I paying the remisiers, and for what purpose?








Anonymous said...



Regarding :



Tip 3: Knowing the right people


This one i cannot help you. You have to know the right people i.e., the people who "control" the placement book. I happen to know a few of them

======================

OK, and I want to place the following on record. It is article that was re-carried by the Business Times.





Published August 17, 2013


US analysts' IPO role under scrutiny

Potential conflict of interests arises as companies interview analysts when selecting bankers to underwrite their IPOs. By Peter Lattman and Susanne Craig




SHADY PRACTICES
During the Internet boom, some Wall Street analysts issued overly optimistic reports about dot-com startups to help their investment bank colleagues. - PHOTO: AFP





THE market for initial public offerings (IPOs) has made a comeback, surging to levels not seen since before the financial crisis. At the same time, concerns have resurfaced over the role of Wall Street research analysts in these lucrative deals.

For years, stock analysts have been barred from pitching IPO business, a big moneymaker for firms like Goldman Sachs, JPMorgan Chase and Citigroup. Banking fees from helping companies list their shares on stock exchanges have topped US$1.7 billion in the United States so far this year.

The country's largest banks agreed to bar their analysts from IPO solicitations a decade ago after regulators, led by Eliot Spitzer, then New York attorney-general, uncovered evidence that during the Internet boom, some analysts issued overly optimistic reports about dot-com startups to help their colleagues on the investment banking side win underwriting assignments.

But some analysts say Wall Street is slipping back into its old ways.



Subscribers, log in here to read the full story. If you do not have an account, subscribe here.

Mr. IPO said...

Remisiers earn about 40% of the commission you generate with the balance going to the brokerage firm. Dealers earn 30% and balance goes to securities firm.

(1) it can be the brokerage houses that want the remisier a to bear the credit risk. So why are they getting 60% but yet not bearing the risk!?

(2) some people still prefer to trade thru brokers

(3) if you trade thru platforms like Saxo, they still assign someone to you for client servicing but perhaps not executing trades. Still need to have someone on payroll.

(4) some super brokers have the means to underwrite the IPO which brokerage houses may not be willing to take the risk. Or the ability to place out to strong hands.

(5) some people are busy and cannot have access to computers to execute trades and prefer to call or SMS their brokers

Anyway your questions are for the brokerage houses. If you don't need a broker, feel free to do without one lah but it's not going to go away.

Anonymous said...



comments @ 18 August 2013 04:43, and 18 August 2013 07:43 refer.



I provide some brief responses. What is the proof of the pudding, and how do your theoretical reasons work-out in practice?


I recall some one of your other blogs that you performed a series of transactions regards REITS.

The problem was that your Tradestation was bleeping and flashing like a Christmas Tree, because all the stops (to the downside) were hit, and that you were overseas.

In this case, tell me, where was your remisier?

Further more, I think you may have done about 4 transactions, so about say $100 in total commissions.

Probably the remisier got $40 from these transactions, and for what? Do you have a reply to this? What was the remisier's role in this?



Additionally, your Tradestation probably cost you some money. You ( that is YOU) are placing the prices yourself (YOURSELF). If so, why are you paying the remisier? For what? Should you not be paying yourself?


Besides, you (that is YOU) probably have to pay for the Tradestation, so won't the $40 be better used for this purpose instead?


So you see, taking some practical example, I don't see what you, or me, should be paying the remisier.

I think the case is made.

========


Now for a tip. If you are worried about your stops (or price targets) you can use SMS alerts. No need for remisier.

Bear in mind that the data in SMS is not encrypted, and the metadata in SMS is impossible to encrypt. So use it advisedly.

That apart, there is still no need for remisier. So, I think you paid $40 for nothing.

Am I right?








Anonymous said...



as an addendum to the above comments, I would also say :


I seem to recall Chew Su Tat expressing ideas along the lines : "OK, why is the participation rate on SGX so low; how to increase non-institional participation, and so on".

I was laughing about it. For me, the reason for low participation is because I don't want to pay the remisiers. So I keep the number of trades low, or at least relatively low.

As a result, SGX LOSES out on fees, the brokerage house LOSES out on fees and so on.

Why am I paying the remisier 40%?

Granted, for those who's fees are only $25 every year, they may not realise the problem.

Still, the basic question arises : for every $100, $1000 in commissions, you pay the remisier $40 $400 for what?

I might as well use this money to buy a dog and buy dog food. No reason to pay the remisier.

What reason to pay the remisier?

Whatever role the remisier plays, and I have 10 points on this, I think I could do it myself. No problem at all.

As the various aspirant readers of this blog go from their $100,000 to $1,000,000, how much will they be paying their remisiers, and for what?




Mr. IPO said...

Err not sure why you are spending so much time complaining about paying commissions to remisier la. You can choose a Saxo platform and don't pay the commission to remisier but Saxo don't have IPO shares and they remunerate their client service staff differently. As I mentioned, different platforms served purposes. With the current state of technology, definitely one can do without remisiers. I can do without one as well. Anyway, you sounded like anonymous 7. Haha. The reason why my remisiers never alert me about the stops being triggered is because I never ask him to monitor
In the first place. Anyway this is my last post on this, I rather spent my time talking about other things than paying commissions to remisiers.

Anonymous said...

You hit the jackpot Mr IPO. I agree with you that the "anonymous 7" is back again.

I guess we have to forgive him coz it seems that he has got some mental issues and please refer him to "IMH" or otherwise, be prepare, he will flood you with comments.

Good luck, Mr IPO.

Anonymous said...

You must be a big leg in order to get a place in the placement. :D

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