MR KHOO Hong Kheng ends his Monday letter, 'Catering to needs of small investors' with the plaintive appeal that 'other players in the industry will take note of this advice and cater to the needs of the masses'.

He is likely to be doomed to disappointment as 'small investors, mum-and-dad investors and retail investors' are an expendable bunch, lying at the bottom of the totem pole, with little clout to speak of, at least where listed companies are concerned.

In his commentary, 'DBS should include smaller investors when raising funds' (May 20), journalist Goh Eng Yeow opined that 'offering preference shares only to big players sends wrong message', implying that the small man had been left out in the cold.

As with every issue, there are pros and cons.

For some years now, IPOs have generally tended to be placed out privately to institutional investors, with a minuscule offering reserved for small investors to subscribe to in the public tranche.

The rationale advanced has ostensibly been to ensure a successful take-up. In some cases, the amount raised from the public has been ridiculously small, barely even covering the cost of the IPO exercise.

Much the same rationale could be applied to this latest offering by DBS, where the added excuse is that the concept of 'Convertible Non-cumulative Preference Shares' could be unfamiliar to the minor investor.

The DBS spokesman who tried to justify his bank's token offer ignores the fact that applying for a public-listing is to give an equal choice to all investors, not just the institutions alone.

Mr Goh brings in the specious issue of 'a good public relations exercise'.

It is nothing of the sort, but merely a question of equitable treatment for all investors, which can be said to be sadly missing in this case.

If these preference shares were never intended to be traded publicly, they should not be listed publicly either.

And if they do not come up for public listing, what is the whole argument about anyway?

Narayana Narayana

This article was first published in The Straits Times on May 31, 2008.