Retail investors getting a bigger slice of Singapore IPO pie

SGX proposes increase of IPO shares available for retail investment to 5%.

Singapore Exchange (SGX) today proposed new share allocations for retail investors participating in Initial Public Offers (IPOs). SGX is proposing revisions to its rules to raise the proportion of IPO shares available for retail investment for Mainboard IPOs with high retail demand.

Following are the proposed new rules:

• Introduction of a prescribed minimum allotment of 5% of the total invitation shares to the public subscription tranche. For example, when 100 million new shares are issued in the IPO, at least 5 million shares must be offered for public subscription.
• Introduction of a claw-back mechanism that increases the number of shares allocated to the public subscription tranche when the total demand for shares in the tranche exceeds prescribed thresholds.
• When the demand through public subscription is below the prescribed thresholds, a reverse claw-back mechanism can be introduced to transfer shares from the public subscription tranche to the placement tranche.

"This initiative is another step in SGX’s plan to transform the securities market, assuring its relevance and competitiveness globally," said SGX.

"Not only will retail investors have more opportunities to participate in IPO subscription, their increased activity in the secondary market will also add to liquidity," it added.