Retail investors trying to get hold of shares in new Catalist listings iX Biopharma, NauticAWT and Choo Chiang Holdings may have a tough time.

Three latest Catalist aspirants opt for safety of placements

By Jeffrey Tan and Joan Ng / theedgemarkets.com | July 16, 2015 : 7:21 PM MYT 
Share on facebook Share on twitter
Printer-friendly versionSend by emailPDF version
SINGAPORE (July 16): Retail investors trying to get hold of shares in new Catalist listings iX Biopharma, NauticAWT and Choo Chiang Holdings may have a tough time.

Each of the three companies are offering a mere one million shares for public application, with the rest of their issues being placed out through their respective agents.

iX Biopharma, an Australia-based pharmaceuticals company, is issuing 65.5 million shares at 46 cents each to raise $30.1 million.

Choo Chiang, a distributor of electrical products and accessories, is issuing 32.3 million shares at 35 cents each to raise $11.6 million.

NauticAWT, which provides engineering services to the oil and gas industry, is issuing 28 million shares at 20 cents each to raise $5.6 million.

“Why list the company in the first place?” says S. Nallakaruppan, an investment specialist with a local brokerage firm, via e-mail. “It is supposed to be an ‘initial public offer’ and not an ‘initial private offer’.”

Nallakaruppan argues that not only does the lack of public availability limit public participation in the stock market, it also creates a “conducive environment for price manipulation”.

In January, Nallakaruppan was among the local trading representatives who banded together to pen a letter to Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam deploring the state of the local market.

Among their grouses: initial share sales with few or no shares issued to the public. The 1,225 individuals who signed the letter proposed that listing rules should require at least 25% of shares to be issued to the public.

Companies that come to market aren’t currently required to offer shares for public application, which is typically done through bank ATMs. In April, GCCP Resources came to market purely with a placement.

Bankers and brokers say distributing a high proportion of IPO shares to individual investors via ATMs can be risky, especially when the market is volatile and investor sentiment is weak.

Traders say that interest in the current issues has been relatively weak.

CIMB ( Financial Dashboard), the issue manager for iX Biopharma’s and Choo Chiang’s IPO, says it typically advises its clients to have at least one million shares made available to the public.

“At least people may apply at the ATM and that could raise awareness for the IPO, which would be good for the company,” says Yee Chiah Sing, CIMB’s head of Catalist.

Yee says it is challenging to gauge the potential demand for the ATM tranche, which makes it a “balancing act” in the end.

“We don't know if the public will apply. But with our existing customers, we know them and we can gauge the demand,” he says.

“A 25% allocation for the ATM tranche may be on the high side. It is tough to gauge retail sentiment and we may end up with a shortfall. This would not be fair to our clients too, who may be interested in the shares,” he adds.

Alex Tan, CEO of Canaccord Genuity, the issue manager for NauticAWT’s IPO, says the offer tranche of one million shares contributes to about 3.6% of the total invitation shares, which is “largely in line with other Catalist IPOs”.

Mohamed Nasser Ismail, SGX’s head of SME development and listings, says the decision on what percentages of shares are offered via the public or placement channels is a commercial decision determined by the company and its advisors.