A Guide To Applying For Local IPOs

Foreword from ShareInvestor

This article “A Guide To Applying For Local IPOs” by Alvin Foo was first published in The Sunday Times on 04 Aug 2013 and is reproduced in this blog in its entirety.

Here’s a five-step guide on how to apply for local IPOs:


1. Open A Broking Account

The account will allow you to trade any shares you get in your IPO application.

You can open this account at one of these retail brokerages: AmFraser Securities, CIMB Securities, DBS Vickers, DMG & Partners Securities, Lim & Tan Securities, Maybank Kim Eng, OCBC Securities, Phillip Securities and UOB Kay Hian.

Most brokerages will require you to show up in person.

2. Open A CDP Account

The CDP account is for trade settlement and it maintains all the securities you buy and sell on the SGX.

If you are over 18 and not an undischarged bankrupt, you can apply by filling in a form.

You can also apply for a CDP account at your broker’s office.

The CDP account has to be linked to the investor’s broking account if you want to trade. There is no limit as to the number of broking accounts that can be linked to the CDP.

There is no fee for opening and linking CDP accounts.

3. Check For New Listings, Read IPO Prospectus

This can be done on the SGX website under the “Company Disclosure” section. You can also find out when the offer ends.

You can also view and download the IPO prospectus, which provides detailed information on the company seeking a listing.

The prospectus will list the size and price of the offer, as well as highlight potential risks. Bear in mind that some IPOs are not open to retail investors.

4. Apply For The IPO

This can be done via ATMs or Internet banking with the three local banks – DBS Bank, United Overseas Bank and OCBC Bank – or by submitting an application form.

An application must be made before the closing date and time – usually before noon on the day the offer ends.

The IPO application fee is $2 per transaction, and you must have enough cash to pay for all the shares you apply for.

5. Check IPO Ballot Results

You will not necessarily get the number of shares you want. This depends on the response to the IPO.

If an IPO has been substantially oversubscribed, you may receive a smaller number of shares or even end up with none.

Any shares you do get will be credited into your CDP account and you may start trading these on the listing date via your broking account.

If you are unsuccessful in the IPO, the amount that had been debited will be refunded to your bank account. This will occur within 24 hours of the balloting date for electronic applications and three market days from the balloting date for printed forms.