When there are large private placements, why have IPOs?
IT comes as a surprise to read Frankie Tan Jock Tee's letter "Cap the IPO shares one can apply for via ATM" (BT, Feb 5).
It conveys the impression that allotment of IPO shares via ATM is on a "first-come first-served" basis instead of the usual balloting after all applications have been pooled and a basis of allotment decided on by the directors.
Perhaps Mr Tan has been confused by the private placement which goes before and hand-in-hand with an IPO.
In recent years, the amount of shares offered to the public has often been derisively small, as the bulk would already have been placed out privately.
I have often proposed that such issues do not really need to go through the intricacies of an IPO, with an invitation to the public to subscribe, and ending in disappointed applicants like Mr Tan.
If SGX's requirements are met, the companies concerned could then apply for listing on the board straightaway without the rigmarole of an IPO process, and small private investors could decide whether they want to invest at whatever market price applies thereafter.
