Does strict due diligence guarantee a successful IPO?
By TEH HOOI LING
THE Singapore Exchange believes that investment banks which have very strict due diligence processes will tend to bring in better quality companies to the market. This is why it is going to be very selective in qualifying the full sponsors - those responsible for bringing companies for listing on its new board, Catalist.
So which of the investment banks have had the best record in the last three years?
Before we go into the detailed results, let's set the stage with some big picture numbers.
Just under 150 companies were admitted to the main board of the SGX between 2005 and 2007. For Sesdaq, it was 36.
More than half these companies - 56 per cent for the main board and 58 per cent for Sesdaq - underperformed the SES All Shares Index from the time they were listed to Jan 9, 2008.
Now on to the records of the various investment banks.
Surprisingly, all the local banks' corporate finance outfits did not have a very good history of bringing better performing companies to the market.
For example for DBS, of the five companies it brought to the main board in 2005, only one - Asia Enterprise Holdings - managed to outperform the broad market. The rest - Longcheer, Genting International, Electrotech and CDW - had all fared worse than the market. These are IPOs where DBS was the sole issue manager.
The average annualised returns of the five IPOs is 14 percentage points worse than the SES All Shares Index. The median is -10 per cent.
In that year, OCBC brought three companies to the main board. All three - Ban Leong Technologies, Karin Technology and Union Steel - under-performed the market.
Meanwhile, UOB Asia had four main board IPOs in 2005. Only one - C&O Pharmaceutical just about edged ahead of the general market by 1.3 per cent. The rest, Sarin Tech, Advanced Integrated Manufacturing and Pacific Healthcare chalked up returns of 10 to 36 percentage points lower than the market.
All its three Sesdaq companies in that year also fell significantly behind the market - in excess of 30 percentage points - in terms of share price performance.
Their general record in 2006 also left much to be desired, although OCBC did hit the jackpot with Jiutian. Between its IPO and Wednesday this week, the stock has outperformed the market by a whopping 160 percentage points.
Last year was not much better. Arguably, the investment bank which has the best performance in the past three years is HL Bank.
Senior Correspondent My study also found that when the market got heated in 2006 and 2007, investment banks tended to stay conservative in pricing their IPOs ... There were huge gains on the first day of trading, the average was 33 per cent gain on debut in 2006 and 50 per cent in 2007, this compares with just 2.9 per cent in 2005.
There are more hits than misses when it comes to the companies it helped go public.
In 2005, it managed the IPO of China Sky Chemical and Sinopipe Holdings. The former outpaced the market by 45 percentage points, while the latter performed in line with the market.
No escaping duds
Three out of its five IPOs outpaced the market. There, is however, no escaping the duds. In that year, Fabchem had turned out to be one, and so did Sun East. Last year, it was responsible for bringing China Oilfield to Singapore. And up till this week, that counter is ahead of the market by 48 percentage points.
Even for Sesdaq listing, HL Bank has brought more winners and losers to investors.
Hong Leong Finance had a very good record in 2005. It hit the bull's eye in all three deals that it did - Fragrance Group, BH Global Marine and China Wheel. Each has outperformed the market by 92, 52 and 11 percentage points respectively.
However, the outfit did not have any deals in the last two years.
Another two investment banks which had brought more winners than losers to the market are Westcomb and Stirling Coleman.
Ironically, they are two of the firms which have been censured before by the exchange for supposedly not being stringent enough in their due diligence work.
Westcomb brought eight companies to the main board and nine to Sesdaq in 2005. Out of that, five from each board have beaten the general market returns.
It did only one deal in 2006, and that was Swiber. The stock has turned out to be a multi-bagger for investors. It has risen by eight times compared with its IPO price.
One of two of its Sesdaq deals in 2006 also turned out to be a super performer. Sitra Holdings has returned 344 per cent since its debut on the second board in November 2006.
Westcomb's record in 2007 also stands out. Out of the four deals it did - three for main board and one for Sesdaq - three outperformed the market by a big margin.
As for Stirling Coleman, it has its hits and misses. But the hits more than make up for the misses.
My study also found that when the market got heated in 2006 and 2007, investment banks tended to stay conservative in pricing their IPOs. As a result, there were huge gains on the first day of trading. The average was 33 per cent gain on debut in 2006 and 50 per cent in 2007. This compared with just 2.9 per cent in 2005.
However big foreign issue managers like UBS and Credit Suisse were rather aggressive in pricing their IPOs. This resulted in issues which didn't leave much on the table for IPO investors, or worse, issues which fell underwater on the first day of trading.
UBS's Babcock and Brown dropped below its IPO price by 4.7 per cent on its first day of listing on Dec 20, 2006. The Swiss bank's two other issues - MacarthurCook Industrial REIT and Parkway Life REIT - last year also ended below their offer prices by 3.3 per cent and 7 per cent res respectively.
The average first-day performance for Credit Suisse's two IPOs in 2006, meanwhile, was a mere 4.6 per cent and its lone IPO in 2007 chalked up a first-day gain of 8.7 per cent. Again, these are issues where the banks are the sole managers.
So, as seen from the study, having a strict due diligence process at the IPO stage does not necessarily guarantee a market-beating issue.
LONDON (Reuters) - A couple discovered after they had married that they were twins who had been split up at birth and adopted by separate families, according to a member of Britain's House of Lords.
British peer David Alton recounted the story to parliament last month to support his argument that artificially conceived children should be told who their biological parents are.
Alton said he had heard the story of the separated twins from a High Court judge who had dealt with the case.
"This did not involve in vitro fertilization: It involved the normal birth of twins who were separated at birth and adopted by separate parents," said Alton, an independent member of the Lords. "They were never told that they were twins."
"They met later in life and felt an inevitable attraction, and the judge had to deal with the consequences of the marriage that they entered into and all the issues of their separation," he said.
"I suspect that it will be a matter of litigation in the future if we do not make information of this kind available to children who have been donor-conceived," he said.
Alton could not immediately be reached for comment and no further information was available about the twins or where they were from.
"I think it's a very tragic story for the people involved," said Pam Hodgkins, head of a group that helps adults affected by adoption.
"It is a lesson that we need to learn and apply to the situation of donor-conceived children," she told Sky News.
"Whilst ... nowadays it would be most unusual for siblings to be separated ... the risk of secrecy affecting the lives of people born as a result of egg and sperm donation is exactly the same as the risks that have affected adopted people in the past," she said.
What are you doing here? - man asks wife at brothel
Wed Jan 9, 11:10 AM ET
WARSAW (Reuters) - A Polish man got the shock of his life when he visited a brothel and spotted his wife among the establishment's employees. Polish tabloid Super Express said the woman had been making some extra money on the side while telling her husband she worked at a store in a nearby town.
"I was dumfounded. I thought I was dreaming," the husband told the newspaper Wednesday.
The couple, married for 14 years, are now divorcing, the newspaper reported.
Three million people have been struck down by the winter vomiting bug - with experts fearing that cases could rise through this month and next.
• Norovirus symptoms
The norovirus season began a month earlier than normal this winter. Cases of the bug increased rapidly, with more than 200,000 people a week now catching the infection, official figures claim.
Hospitals struggling to cope have closed hundreds of wards to new patients. Three hospitals have been put on red alert because of a critical shortage of beds caused by people falling ill with the bug.
Some schools are sending letters to parents telling them of norovirus symptoms to look out for and asking them to keep children at home for 48 hours after the infection has cleared.
Others have installed alcohol gel dispensers for children to clean their hands before lunch.
The High Street chemist Boots said sales of anti-diarrhoea tablets were up by almost half on last year.
With millions returning to schools and the workplace this week, experts gave warning yesterday that cases of the bug - which causes vomiting and diarrhoea and can be fatal to vulnerable groups such as the elderly - could continue to rise in the next six weeks.
New cases are now being diagnosed at the same rate as during the last official epidemic five years ago.
Helen Young, the clinical director of NHS Direct, which provides health advice over the phone, said: "We are seeing an increasing number of calls about diarrhoea and vomiting.
"It is certainly one of the top two reasons people have for calling us at the moment. Norovirus is a major issue for the whole NHS right now and we urge anyone who has symptoms to engage in good hygiene to prevent it spreading further and to drink plenty of fluids."
The winter sickness crisis has been exacerbated by an outbreak of flu this week, with doctors being told to start prescribing antiviral drugs to protect those at risk.
Figures from the Health Protection Agency showed yesterday that in the final three months of last year 1,922 laboratory samples had been confirmed as the norovirus bug.
The agency estimates that for every case confirmed in the laboratory, there are 1,500 more in the community, suggesting that more than 2.8 million people - almost 1 million a month - have succumbed so far this winter. Levels of the infection are now comparable to those during the first half of the last official norovirus epidemic during the winter of 2002/03.
Last November and December, new cases exceeded the figures for 2002, but experts are uncertain as to whether the current outbreak will reach epidemic levels.
The figures show current infection levels are well in excess of last year, when there had been 935 confirmed laboratory cases by this time - only half the level seen now.
The three hospitals put on alert over the bug are in Lincolnshire, where the number of patients has risen to 20 per cent above normal.
George Briggs, the general manager for emergency care at United Lincolnshire Hospitals NHS Trust, said: "We have had a 20 per cent increase in the number of people being referred to us by GPs with illnesses. We have had some with cold and flu and we have had some with the norovirus.
"We expect an increase in the winter, we always do, hence we put some beds to one side. We didn't expect a 20 per cent increase."
A spokesman for the Health Protection Agency said it was too early to say if the disease had reached its peak because the number of laboratory tested samples dropped off during the Christmas and New Year holiday period.
The pattern of the disease for the last four years has been a rapid increase in December, peaking in early January and then dropping dramatically in the early spring.
For the agency to declare another epidemic, the current rate of new cases would need to increase dramatically again in the next few weeks, or continue infecting people into the early summer months.
The latest figures came in an agency update released yesterday, which said: "This season we have seen an increase in reports of noro-virus cases, almost double the number reported for the same period last year.
"The self-limiting infection usually only lasts a few days hence the majority of cases are not reported to the clinician."
Anyone with symptoms of norovirus is advised to stay at home, drink plenty of fluids, not prepare food for others and wash their hands thoroughly and regularly with soap and water.
4 comments:
Business Times - 12 Jan 2008
Does strict due diligence guarantee a successful IPO?
By TEH HOOI LING
THE Singapore Exchange believes that investment banks which have very strict due diligence processes will tend to bring in better quality companies to the market. This is why it is going to be very selective in qualifying the full sponsors - those responsible for bringing companies for listing on its new board, Catalist.
So which of the investment banks have had the best record in the last three years?
Before we go into the detailed results, let's set the stage with some big picture numbers.
Just under 150 companies were admitted to the main board of the SGX between 2005 and 2007. For Sesdaq, it was 36.
More than half these companies - 56 per cent for the main board and 58 per cent for Sesdaq - underperformed the SES All Shares Index from the time they were listed to Jan 9, 2008.
Now on to the records of the various investment banks.
Surprisingly, all the local banks' corporate finance outfits did not have a very good history of bringing better performing companies to the market.
For example for DBS, of the five companies it brought to the main board in 2005, only one - Asia Enterprise Holdings - managed to outperform the broad market. The rest - Longcheer, Genting International, Electrotech and CDW - had all fared worse than the market. These are IPOs where DBS was the sole issue manager.
The average annualised returns of the five IPOs is 14 percentage points worse than the SES All Shares Index. The median is -10 per cent.
In that year, OCBC brought three companies to the main board. All three - Ban Leong Technologies, Karin Technology and Union Steel - under-performed the market.
Meanwhile, UOB Asia had four main board IPOs in 2005. Only one - C&O Pharmaceutical just about edged ahead of the general market by 1.3 per cent. The rest, Sarin Tech, Advanced Integrated Manufacturing and Pacific Healthcare chalked up returns of 10 to 36 percentage points lower than the market.
All its three Sesdaq companies in that year also fell significantly behind the market - in excess of 30 percentage points - in terms of share price performance.
Their general record in 2006 also left much to be desired, although OCBC did hit the jackpot with Jiutian. Between its IPO and Wednesday this week, the stock has outperformed the market by a whopping 160 percentage points.
Last year was not much better. Arguably, the investment bank which has the best performance in the past three years is HL Bank.
Senior Correspondent My study also found that when the market got heated in 2006 and 2007, investment banks tended to stay conservative in pricing their IPOs ... There were huge gains on the first day of trading, the average was 33 per cent gain on debut in 2006 and 50 per cent in 2007, this compares with just 2.9 per cent in 2005.
There are more hits than misses when it comes to the companies it helped go public.
In 2005, it managed the IPO of China Sky Chemical and Sinopipe Holdings. The former outpaced the market by 45 percentage points, while the latter performed in line with the market.
No escaping duds
Three out of its five IPOs outpaced the market. There, is however, no escaping the duds. In that year, Fabchem had turned out to be one, and so did Sun East. Last year, it was responsible for bringing China Oilfield to Singapore. And up till this week, that counter is ahead of the market by 48 percentage points.
Even for Sesdaq listing, HL Bank has brought more winners and losers to investors.
Hong Leong Finance had a very good record in 2005. It hit the bull's eye in all three deals that it did - Fragrance Group, BH Global Marine and China Wheel. Each has outperformed the market by 92, 52 and 11 percentage points respectively.
However, the outfit did not have any deals in the last two years.
Another two investment banks which had brought more winners than losers to the market are Westcomb and Stirling Coleman.
Ironically, they are two of the firms which have been censured before by the exchange for supposedly not being stringent enough in their due diligence work.
Westcomb brought eight companies to the main board and nine to Sesdaq in 2005. Out of that, five from each board have beaten the general market returns.
It did only one deal in 2006, and that was Swiber. The stock has turned out to be a multi-bagger for investors. It has risen by eight times compared with its IPO price.
One of two of its Sesdaq deals in 2006 also turned out to be a super performer. Sitra Holdings has returned 344 per cent since its debut on the second board in November 2006.
Westcomb's record in 2007 also stands out. Out of the four deals it did - three for main board and one for Sesdaq - three outperformed the market by a big margin.
As for Stirling Coleman, it has its hits and misses. But the hits more than make up for the misses.
My study also found that when the market got heated in 2006 and 2007, investment banks tended to stay conservative in pricing their IPOs. As a result, there were huge gains on the first day of trading. The average was 33 per cent gain on debut in 2006 and 50 per cent in 2007. This compared with just 2.9 per cent in 2005.
However big foreign issue managers like UBS and Credit Suisse were rather aggressive in pricing their IPOs. This resulted in issues which didn't leave much on the table for IPO investors, or worse, issues which fell underwater on the first day of trading.
UBS's Babcock and Brown dropped below its IPO price by 4.7 per cent on its first day of listing on Dec 20, 2006. The Swiss bank's two other issues - MacarthurCook Industrial REIT and Parkway Life REIT - last year also ended below their offer prices by 3.3 per cent and 7 per cent res respectively.
The average first-day performance for Credit Suisse's two IPOs in 2006, meanwhile, was a mere 4.6 per cent and its lone IPO in 2007 chalked up a first-day gain of 8.7 per cent. Again, these are issues where the banks are the sole managers.
So, as seen from the study, having a strict due diligence process at the IPO stage does not necessarily guarantee a market-beating issue.
Twins separated at birth met and married
Fri Jan 11, 2:33 PM ET
LONDON (Reuters) - A couple discovered after they had married that they were twins who had been split up at birth and adopted by separate families, according to a member of Britain's House of Lords.
British peer David Alton recounted the story to parliament last month to support his argument that artificially conceived children should be told who their biological parents are.
Alton said he had heard the story of the separated twins from a High Court judge who had dealt with the case.
"This did not involve in vitro fertilization: It involved the normal birth of twins who were separated at birth and adopted by separate parents," said Alton, an independent member of the Lords. "They were never told that they were twins."
"They met later in life and felt an inevitable attraction, and the judge had to deal with the consequences of the marriage that they entered into and all the issues of their separation," he said.
"I suspect that it will be a matter of litigation in the future if we do not make information of this kind available to children who have been donor-conceived," he said.
Alton could not immediately be reached for comment and no further information was available about the twins or where they were from.
"I think it's a very tragic story for the people involved," said Pam Hodgkins, head of a group that helps adults affected by adoption.
"It is a lesson that we need to learn and apply to the situation of donor-conceived children," she told Sky News.
"Whilst ... nowadays it would be most unusual for siblings to be separated ... the risk of secrecy affecting the lives of people born as a result of egg and sperm donation is exactly the same as the risks that have affected adopted people in the past," she said.
What are you doing here? - man asks wife at brothel
Wed Jan 9, 11:10 AM ET
WARSAW (Reuters) - A Polish man got the shock of his life when he visited a brothel and spotted his wife among the establishment's employees. Polish tabloid Super Express said the woman had been making some extra money on the side while telling her husband she worked at a store in a nearby town.
"I was dumfounded. I thought I was dreaming," the husband told the newspaper Wednesday.
The couple, married for 14 years, are now divorcing, the newspaper reported.
Britain in grip of norovirus as cases hit 3m
By Rebecca Smith, Medical Editor
12/01/2008
Three million people have been struck down by the winter vomiting bug - with experts fearing that cases could rise through this month and next.
• Norovirus symptoms
The norovirus season began a month earlier than normal this winter. Cases of the bug increased rapidly, with more than 200,000 people a week now catching the infection, official figures claim.
Hospitals struggling to cope have closed hundreds of wards to new patients. Three hospitals have been put on red alert because of a critical shortage of beds caused by people falling ill with the bug.
Some schools are sending letters to parents telling them of norovirus symptoms to look out for and asking them to keep children at home for 48 hours after the infection has cleared.
Others have installed alcohol gel dispensers for children to clean their hands before lunch.
The High Street chemist Boots said sales of anti-diarrhoea tablets were up by almost half on last year.
With millions returning to schools and the workplace this week, experts gave warning yesterday that cases of the bug - which causes vomiting and diarrhoea and can be fatal to vulnerable groups such as the elderly - could continue to rise in the next six weeks.
New cases are now being diagnosed at the same rate as during the last official epidemic five years ago.
Helen Young, the clinical director of NHS Direct, which provides health advice over the phone, said: "We are seeing an increasing number of calls about diarrhoea and vomiting.
"It is certainly one of the top two reasons people have for calling us at the moment. Norovirus is a major issue for the whole NHS right now and we urge anyone who has symptoms to engage in good hygiene to prevent it spreading further and to drink plenty of fluids."
The winter sickness crisis has been exacerbated by an outbreak of flu this week, with doctors being told to start prescribing antiviral drugs to protect those at risk.
Figures from the Health Protection Agency showed yesterday that in the final three months of last year 1,922 laboratory samples had been confirmed as the norovirus bug.
The agency estimates that for every case confirmed in the laboratory, there are 1,500 more in the community, suggesting that more than 2.8 million people - almost 1 million a month - have succumbed so far this winter. Levels of the infection are now comparable to those during the first half of the last official norovirus epidemic during the winter of 2002/03.
Last November and December, new cases exceeded the figures for 2002, but experts are uncertain as to whether the current outbreak will reach epidemic levels.
The figures show current infection levels are well in excess of last year, when there had been 935 confirmed laboratory cases by this time - only half the level seen now.
The three hospitals put on alert over the bug are in Lincolnshire, where the number of patients has risen to 20 per cent above normal.
George Briggs, the general manager for emergency care at United Lincolnshire Hospitals NHS Trust, said: "We have had a 20 per cent increase in the number of people being referred to us by GPs with illnesses. We have had some with cold and flu and we have had some with the norovirus.
"We expect an increase in the winter, we always do, hence we put some beds to one side. We didn't expect a 20 per cent increase."
A spokesman for the Health Protection Agency said it was too early to say if the disease had reached its peak because the number of laboratory tested samples dropped off during the Christmas and New Year holiday period.
The pattern of the disease for the last four years has been a rapid increase in December, peaking in early January and then dropping dramatically in the early spring.
For the agency to declare another epidemic, the current rate of new cases would need to increase dramatically again in the next few weeks, or continue infecting people into the early summer months.
The latest figures came in an agency update released yesterday, which said: "This season we have seen an increase in reports of noro-virus cases, almost double the number reported for the same period last year.
"The self-limiting infection usually only lasts a few days hence the majority of cases are not reported to the clinician."
Anyone with symptoms of norovirus is advised to stay at home, drink plenty of fluids, not prepare food for others and wash their hands thoroughly and regularly with soap and water.
----------------------------------------------------------------------
Bug battle
To maximise your chances of avoiding the virus:
• Avoid direct contact with anyone already infected. It is highly contagious.
• Do not share food or drink with anyone infected.
• Disinfect any surfaces you suspect may have been contaminated.
Wear gloves if cleaning up anyone else's vomit.
• It is impossible to guarantee prevention. Children and the elderly should take special care to avoid those infected.
What to do if you have it:
• There is no specific treatment - the illness has to run its course so stay at home, rest and drink plenty of fluids to avoid dehydration.
• Take over-the-counter anti-diarrhoea treatments.
• Wash your hands regularly and thoroughly with soap and water.
• Avoid direct contact with others and avoid preparing food for others until at least 48 hours after symptoms have gone.
Post a Comment