Some are wary of listing now, others abort plans for fear of poor interest
By OH BOON PING 12 September 2008
MARKET conditions continue to be tough for companies hoping to list their shares here, and the talk is that a number of them are holding back on their initial public offerings (IPOs) until the situation improves.
Companies that are maintaining a ‘wait-and-see’ attitude for now include China Forestry Holdings, Sports Asia and China Kunda Technology, some industry watchers told BT.
Indeed, China Kunda - a maker of plastic moulds and injection parts - had initially planned to launch its IPO tomorrow, but the firm pulled out of the plan at the eleventh hour for fear of poor investors’ interest.
There are also others that had lodged their propectuses a few months ago, but have yet to launch their share offers, while three firms - China Stationery, Grand Pacific Properties and Maritime Capital Shipping - aborted plans for a listing here, a check on the Monetary Authority of Singapore Opera website revealed.
The developments came as global equity markets were hammered by the spate of bad news from the US, while the economic climate looks increasingly bleak.
Rising jobless claims in the US coupled with the troubles at finance giants Fannie Mae and Freddie Mac had sent Asian stock markets crashing in recent weeks.
Accordingly, a number of IPO stocks here sank below their offer prices right after the opening bell.
For example, shares of Healthway Medical, a private outpatient medical service provider, crashed from its offer price of 36 cents to 22.5 cents on its trading debut, while China Zaino International plunged 20 per cent on opening day, closing down 12 cents at 48 cents.
Another stock - ArtiVision Technologies - ended its debut on Aug 18 at 15.5 cents, diving 4.5 cents from its 20-cent offer price.
Given these stocks’ dismal debut, OCBC’s investment banking head George Lee told BT that he is not surprised such a trend has emerged.
‘The poor stock market sentiments and share prices of companies, that went IPO recently, trading below IPO pricing have definitely affected the take-up rate of IPO placement tranche.
‘Even with valuation very low, potential IPO candidates are still finding it difficult to attract investors’ interest. There is no choice for potential IPO candidates, but to postpone their IPO launch.’
Robson Lee, partner at law firm Shook Lin & Bok LLP agrees.
He said: ‘In today’s environment, cash is king. So companies fear that their stock prices may tumble in such a market or it fails to raise the desired level of capital.’
However, Mr Lee, who specialises in legal advisory services for IPOs, believes that these firms ‘will have to eventually make a decision on whether to go ahead or abort the IPO, if the market conditions worsen.’
At Shook Lin & Bok, he says, a few of its IPO clients are rescheduling their listing plans till next year.
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Firms put IPOs on hold in hope of better times
Some are wary of listing now, others abort plans for fear of poor interest
By OH BOON PING
12 September 2008
MARKET conditions continue to be tough for companies hoping to list their shares here, and the talk is that a number of them are holding back on their initial public offerings (IPOs) until the situation improves.
Companies that are maintaining a ‘wait-and-see’ attitude for now include China Forestry Holdings, Sports Asia and China Kunda Technology, some industry watchers told BT.
Indeed, China Kunda - a maker of plastic moulds and injection parts - had initially planned to launch its IPO tomorrow, but the firm pulled out of the plan at the eleventh hour for fear of poor investors’ interest.
There are also others that had lodged their propectuses a few months ago, but have yet to launch their share offers, while three firms - China Stationery, Grand Pacific Properties and Maritime Capital Shipping - aborted plans for a listing here, a check on the Monetary Authority of Singapore Opera website revealed.
The developments came as global equity markets were hammered by the spate of bad news from the US, while the economic climate looks increasingly bleak.
Rising jobless claims in the US coupled with the troubles at finance giants Fannie Mae and Freddie Mac had sent Asian stock markets crashing in recent weeks.
Accordingly, a number of IPO stocks here sank below their offer prices right after the opening bell.
For example, shares of Healthway Medical, a private outpatient medical service provider, crashed from its offer price of 36 cents to 22.5 cents on its trading debut, while China Zaino International plunged 20 per cent on opening day, closing down 12 cents at 48 cents.
Another stock - ArtiVision Technologies - ended its debut on Aug 18 at 15.5 cents, diving 4.5 cents from its 20-cent offer price.
Given these stocks’ dismal debut, OCBC’s investment banking head George Lee told BT that he is not surprised such a trend has emerged.
‘The poor stock market sentiments and share prices of companies, that went IPO recently, trading below IPO pricing have definitely affected the take-up rate of IPO placement tranche.
‘Even with valuation very low, potential IPO candidates are still finding it difficult to attract investors’ interest. There is no choice for potential IPO candidates, but to postpone their IPO launch.’
Robson Lee, partner at law firm Shook Lin & Bok LLP agrees.
He said: ‘In today’s environment, cash is king. So companies fear that their stock prices may tumble in such a market or it fails to raise the desired level of capital.’
However, Mr Lee, who specialises in legal advisory services for IPOs, believes that these firms ‘will have to eventually make a decision on whether to go ahead or abort the IPO, if the market conditions worsen.’
At Shook Lin & Bok, he says, a few of its IPO clients are rescheduling their listing plans till next year.
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