An initial public offering is also commonly known as Initial Public Offering, or IPO for short.
Before an IPO, the company is private and therefore its shares are only traded by early investors. After an IPO, however, ownership of shares is open to the general market, so an IPO is also known as fundraising, offering or listing.
If you are interested in buying an IPO of a company, you can do so through various online banking platforms such as Maybank2u, RHBNow, etc. If more investors buy IPO shares than the number of publicly offered shares, then the company will allocate the IPO shares by lottery.
There are several tips that people can refer to when buying IPOs.
1. understand the IPO Basis of Allotment
In the case of an overbought IPO, the IPO shares will be allocated by lottery, i.e. the applicants will be divided into groups according to the number of shares applied for, e.g. investors applying for 1,000 to 2,900 shares, those applying for 6,000 to 10,900 shares, and so on.
Once you know which group you belong to, you only need to choose the lowest number of shares in the group to apply for. For example, when your budget is in the group of 6,000 to 10,900 shares, you only need to apply for 6,000 shares. This is because if you apply for 10,900 shares, the maximum number of shares you can get is only 6,000 shares.
It is important to note that the Basis of Allotment may vary from IPO to IPO, but the differences are generally not significant. Next time you apply for an IPO, you can refer to the Basis of Allotment of other IPOs.
2. Filing by the deadline
Each IPO has a deadline and a lottery date, and the lottery is usually held within 3 days after the deadline. You can apply only one day before the deadline, so that you can reduce the time your money is tied up in the IPO, and in case you do not win the IPO lottery, you can recover your money in the shortest possible time.
