What it is…
Continuing from our earlier article on IPO deals, we share some guidelines when looking at IPO deals. When a privately held company looks for funding, it can either get money from lenders (such as banks) or by the sale of its shares. When the company offers its shares to the public for the first time, this is called an initial public offering (IPO).
IPOs are offered on the primary market directly to investors, and once the companies become listed, they are traded on the secondary market, which is the stock exchange.
To apply for an IPO on the primary market in Singapore, you need to have a Direct Securities Account with The Central Depository (also known as a CDP Account), and a local bank account. Once these are in place, one can go to the ATM machine to apply for shares.
Reading the IPO prospectus
The IPO prospectus is a voluminous document that usually contains all the relevant information investors should know about a company. Before investing in IPOs, you must know more about the company’s business, future growth drivers, risks, and so on. However, many investors are put off by the thickness of the document (usually 500 pages or more). Therefore, to help you breeze through an IPO prospectus effectively, we have laid out the top eight things to look out for in a separate article.
Even if you do not invest in an IPO and only invest in the company after it has gone public for some time, its IPO prospectus is still a very useful go-to guide for everything there is to know about the company. It is almost always more detailed than an annual report.
Recent IPOs in Singapore
If you want to know which are the recent companies listing their shares for the first time, you can find their IPO prospectuses on the SGX website here.
However, if you want to know how the recently listed stocks are doing, you can also head over to share investor.com’s webpage that shows an overview of their stock performance.
Should you invest in IPOs at all?
Based on the data provided above, it appears that only 11 out of 25 IPOs in these two years are treading above water (i.e. trading above their IPO price).
Most of the recently-listed companies seems to be doing alright. This begs the question for many retail and institutional investors: Are IPOs worthy to subscribe to? The short answer is: it depends, but mostly no.
If so, what are the ways that one can evaluate an IPO deal? In a separate article, we will share the factors we use to evaluate IPO deals.
The information provided is for general information purposes only and is not intended to be personalized investment or financial advice.