Singapore IPOs: Why I No Longer Cover Every Listing
Some readers may have noticed that I have not been writing about every Singapore IPO since last year. The simple reason is that life has become busier. Between my day job, an increasingly packed travel schedule, family commitments and desire to play more golf, I have become much more selective about how I spend my time. Writing detailed IPO reviews takes time — reading prospectuses, analysing financials, comparing valuations and understanding the competitive landscape. While I still enjoy investing and writing, I no longer feel the need to cover every IPO that comes to market. Instead, going forward, I will probably focus only on IPOs where I am seriously considering investing my own money or where there is something particularly interesting that is worth discussing. I suspect this will make the blog more useful as well. Rather than writing about every deal, I can spend more time sharing my thoughts on the handful that I believe deserve attention. That bring...
Comments
1. Prospectus states stabilisation/over-allotment option of 46,193,000 units (13.8% of offering).Prime reit announced yesterday Stabilisation/over-allotment is 22,727,000 Units (6.8% of offering). This is almost 50% reduction. There should be an explanation how this affects investors, is this a reduction in stabilisation/over-allotment option. As an investor, I think a bigger amount available to stabilise is better.
2. Another announcement says the public offer or retail tranche has increased from strong demand. Public tranche went up to 40,909,000 Units, above original size of 16,761,000 Units. Where did the extra 24,148,000 units for this increase come from. The announcement does not say. Guessing:
a. 23,466,000 units came from reducing the stabilisation ability/over-allotment option for the IPO; and
b. 682,000 units are unaccounted for.
It is good for issuer to clarify where the units from the public tranche demand comes from. The prospectus does not say that over-allotment option/stabilisation can be reduced to satisfy extra demand from retail investors.
3. If the over-allotment option is reduced, the issuer should clarify the resulting difference to information in the prospectus. There are many pages that use the original over-allotment option figure. EG: page 87 the shareholding of major shareholders assumes the over-allotment option is exercised in full, are based on original over-allotment option size of 46,193,000 units (not 22,727,000 units). KBS REIT Properties III’s final shareholding is not 182,216,000, but 205,682,000 which is 22.3% (not 19.7%) of the total unit capital.
4. There is no announcement on the placement tranche demand. Also no announcement whether placement agreement was signed (supposed to be 15 July according to prospectus). Since Demand = Placement tranche + Public tranche + over-allotment option. If the over-allotment option is reduced, does that mean that total demand is reduced? In this case it seems to have been shifted to public tranche, and it is unclear why. They issuer should clarify whether the over-allotment option demand was originally intended to be from the institutional placement and whether that demand now is no longer there but only in the retail tranche and is that the reason for the change?
5. Can the issuer or banks change the offer structure stated in the prospectus so drastically after the close of the IPO? Retail investors rely on the offer structure stated in the prospectus when they apply. Would a retail investor still have bought if they knew the stabilisation/over-allotment option would after close be reduced by almost 50%. Eagle REIT stabilisation amount was also 6+%, but share price went down. Does reducing the stabilisation from 13.8% to 6.8% mean like Eagle a lesser ability to stabilize, and greater risk to share price?
6. Does the change in offer structure mean that the bankers do not have to underwrite? There should be an explanation, why the change, and if it affects underwriting by the bankers. If the IPO is not underwritten, this must be clearly stated in the prospectus.