IN HIS letter "Negative impact if IPOs sidestep retail investors" last Friday, Mr Loke Hon Yiong said that retail investors are largely sidestepped in recent initial public offerings (IPOs) and are therefore denied access to potentially profitable trades.

The reality, of course, is that there is nothing to prevent him from buying in the open market at any price prevailing thereafter to suit his investment inclinations.

As the figures in the article "IPOs not so public after all" (Feb 8) reveal, exactly half of the privately placed IPOs mentioned subsequently stood, in varying degrees, at a premium to the issued price.

Overall, the companies mentioned in the article, given an average IPO pricing of 24 cents, can be calculated to have only a very modest market premium at 25.5 cents. As typically IPO allotments are dished out to small applicants (like Mr Loke himself?) in lots of 1,000 shares, he is quite some way off from any profit after paying sales expenses.

Mr Loke may be forgiven for thinking that IPOs are for the benefit of small investors. That may well have been the case almost half a century ago when the first of such offerings appeared in Singapore, and ironically, then too as private placements through leading stockbroker firms.

Over the years, the more cynical observers (like myself) have come to think that IPOs have more benefits for bigger shareholders through a public listing.

There have been instances where the amounts raised through an IPO have been comparatively small, and I have often said that it is counter-productive to go through the charade of an IPO when most of the money raised would be dissipated through the expenses of the launch.

The interests of the company, and by extension all its shareholders, would be better served by placing out shares privately instead and then applying for listing.

Mr Loke makes impassioned pleas on behalf of "small investors" on the grounds of "checks and balances", "corporate governance", "accountability", and so on.

Perhaps he should wake up to the harsh reality that small investors, even as a collective body, have little clout, and are generally regarded as "dispensable" and/or a "necessary evil", tolerated only to make up the numbers required to retain or maintain listing.

Narayana Narayana

This article was first published in The Straits Times.