In what marks a new precedent for Asian equity markets, the Monetary Authority of Singapore (MAS) has revealed that SingPost established a special incentive scheme in a bid to secure large institutional orders for its IPO last week. On its website this morning (Tuesday), the MAS lists eight institutional accounts that received stock at a discount to the IPO price of S$0.60.
Institutional accounts were offered two sets of discounts. Those allocated tickets of more than $35 million received the stock at a 1.5% discount and those allocated more than $20 million, at a 1% discount. According to the website, the Capital Group and Jardine Fleming Asset Management received an aggregate 116.7 million shares at a 1.5% discount and Asia Life, Fidelity, NTUC Income, Schroder Investment Management, Standard Pacific and UOB Asset Management an aggregate 223 million shares at a 1% discount.
This means that net proceeds have been slightly reduced from S$786.6 million to S$784.14 million ($450.63 million). However, rival bankers say that $1.41 million is a relatively small price tag for the comfort of securing anchor accounts at a time of exceptionally difficult market conditions. It can also be argued that building strong positive momentum early on meant that SingPost was able to lift final pricing to its overall benefit.
Bankers cannot think of any other instance outside of Asia where such a scheme has been put in place before and indeed under US SEC regulations it would not be allowed. In Singapore, on the other hand, the scheme has previously been used in a slightly modified fashion.
Both CapitaMall Trust and A-Reit gave pricing discounts to cornerstone investors that participated pre-IPO. A-Reit also offered anchor investors similar discounts for large orders during its IPO, but since none were allocated more than the 20 million unit or 35 million unit threshold, these were not triggered.
Just over 400 institutional investors applied for shares in SingPost's IPO, with six investors placing orders for more than $50 million and 35 for more than $20 million. The full 1.311 billion shares available have been allocated although the greenshoe has not yet been exercised.
This means that institutions have received 881 million shares of which 350 million went to anchor investors, while retail received 80 million from the public offering and 350 million from the placement tranche. Of this latter 350 million, 100 million shares were also allocated to the Japanese POWL (Public Offering Without Listing).