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 What is the catch with IPOs?

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TScontestchris
post Mar 28 2017, 12:36 AM, updated 8y ago

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As long as it is a decent company with a good track record, share prices always tend to go up post IPO.

Now what's the catch here? Can anyone really apply for IPO with Direct CDS account? Surely there is a catch. How is ballotting done? If oversubscribed x10, will they just divide each person application by 10 times? Or is it totally random, or is it they will pick those with the largest lump sum investment?
shankar_dass93
post Mar 28 2017, 12:52 AM

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QUOTE(contestchris @ Mar 28 2017, 12:36 AM)
As long as it is a decent company with a good track record, share prices always tend to go up post IPO.

Now what's the catch here? Can anyone really apply for IPO with Direct CDS account? Surely there is a catch. How is ballotting done? If oversubscribed x10, will they just divide each person application by 10 times? Or is it totally random, or is it they will pick those with the largest lump sum investment?
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While waiting for others to reply, here is my 2cents.

Firstly, you do know why a company chooses an IPO as a means of raising funds apart from taking a loan, right ?

Read this

There's no catch over here except you have to use your own sound judgement and assess if the given IPO is worth to subscribe too and what's your Investment/Trading plan? (Are you buying it for the long-term, medium term or planning to flip it on day 1 of it being listed).

Now to answer this question:Can anyone really apply for IPO with Direct CDS account?

The answer is yes, as long as you have sufficient funds to apply for the desire number of units

Now to answer this question:How is ballotting done?

Link 1


Link 2


I tried calling up Tricor somewhere around last yr to enquire about the methods of allocations and the representative that i spoke to replied by saying this "We have set a predetermined formula which is being tweaked based on various factors such as the demand for the IPO etc and thereafter the allocation is being made accordingly.

Asked them to explain the predetermined formula that they set and got a reply saying that "It was PnC" sweat.gif
Ramjade
post Mar 28 2017, 09:40 AM

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QUOTE(contestchris @ Mar 28 2017, 12:36 AM)
As long as it is a decent company with a good track record, share prices always tend to go up post IPO.

Now what's the catch here? Can anyone really apply for IPO with Direct CDS account? Surely there is a catch. How is ballotting done? If oversubscribed x10, will they just divide each person application by 10 times? Or is it totally random, or is it they will pick those with the largest lump sum investment?
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Not necessary. Take manulife US reit. It fell after it's IPO price. Some stuff for you to rad about IPO. It's for SG market but could still be relevant
How to increase your probability of get IPO shares from the public tranche
Sentiments & IPO
Performance of my IPO tikams in 2012 (this have some stuff you expect from IPOs)
IPOing 101 - how to read a balloting table

This post has been edited by Ramjade: Mar 28 2017, 09:42 AM
TScontestchris
post Mar 28 2017, 06:40 PM

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Ok, so put it this way. If I apply online via M2U for an IPO, how simple/difficult is the process?

What about payment...will they take it first, then return if you fail?

Is it possible say if I apply for 50 lots and they give me 25 lots?

Any brokerage fees involved?

Will the stock appear in your Maybank (or whatever else broker) account on the first day the stock is officially listed on Bursa?

From that point on, is it a fully normal stock?

What about stocks for IPOs that give warrants? Like Ecoworld I think.
ILoveLalat.net
post Mar 28 2017, 07:05 PM

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QUOTE(contestchris @ Mar 28 2017, 06:40 PM)
Ok, so put it this way. If I apply online via M2U for an IPO, how simple/difficult is the process?
Straight forward, but always take note that you must have a direct CDS account. I have seen people bid for IPOs, got allotted but just spam fake the CDS number. Your allotment will be deemed null and void.

What about payment...will they take it first, then return if you fail?
Yes. If partially allotted, the remaining funds that was not allotted.

Is it possible say if I apply for 50 lots and they give me 25 lots?
It depends on the basis of allotment, so if you bid 50 lots and successful applicants get 25 lots, then yes, you get 25 lots and the remaining funds being returned afterwards.

Any brokerage fees involved?
Apart from selling, no brokerage fess incurred. However, a RM1 fee is being processed by the bank when you apply for IPOs.

Will the stock appear in your Maybank (or whatever else broker) account on the first day the stock is officially listed on Bursa?
Usually, that is the case.

From that point on, is it a fully normal stock?
I will assume it will behave like any other stock as it goes listing, yes.

What about stocks for IPOs that give warrants? Like Ecoworld I think.
Same rules apply. Hope this helps. 
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This post has been edited by ILoveLalat.net: Mar 28 2017, 07:06 PM
TScontestchris
post Mar 28 2017, 07:40 PM

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Sir thanks, it makes everything so simple to understand!

Regarding point number 3, I mean...is their allotment random? Like I applied for 50 lots...can they partially fulfil it at any number? Could be 25, 10, 35 etc? Usually will it be partial or zero?

Also, always in IPO you read they reserve for institutional investors. Do those stocks able to be traded on the open market soon after too?
djhenry91
post Mar 28 2017, 09:48 PM

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QUOTE(contestchris @ Mar 28 2017, 07:40 PM)
Sir thanks, it makes everything so simple to understand!

Regarding point number 3, I mean...is their allotment random? Like I applied for 50 lots...can they partially fulfil it at any number? Could be 25, 10, 35 etc? Usually will it be partial or zero?

Also, always in IPO you read they reserve for institutional investors. Do those stocks able to be traded on the open market soon after too?
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allotment random wan..my friend apply BCMall..10k unit apply dapat 1k..
i terus doh.gif
my friend terus sad..got sell high price on same day la but earn not much
ILoveLalat.net
post Mar 28 2017, 09:49 PM

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QUOTE(contestchris @ Mar 28 2017, 07:40 PM)
Sir thanks, it makes everything so simple to understand!

Regarding point number 3, I mean...is their allotment random? Like I applied for 50 lots...can they partially fulfil it at any number? Could be 25, 10, 35 etc? Usually will it be partial or zero?

Also, always in IPO you read they reserve for institutional investors. Do those stocks able to be traded on the open market soon after too?
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The allotment is at random, though I heard somewhere that the issuing houses also reserve the right to deny you from getting the allotment but it is very rare and it happens on a case to case basis with strong reasons.

However, let us assume you have all the luck in the world, you always managed to secure an IPO on every occasion, the allotted amount varies. You can check both Tricor and Malaysian Issuing House for the basis of allotment.

Tricor: https://www.tiih.com.my/

MIIH: http://www.mih.com.my/index.php/ipo-s/ipo-press-release

It is all random, so do allocate your capital wisely. Usually, the higher the amount you placed, the higher chances. Occasionally, if one is at the top end of the range, it can be a confirm hit for the allotment.

 

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