IPO balloting demand: keep it real

AS much as bankers like to broadcast how many times oversubscribed their initial public offerings (IPOs) are, they also know that these numbers get far more attention than they deserve.

Today, there is no consistency in how IPO subscription rates are reported. After the close of an IPO and before the stock begins to trade on the Singapore Exchange, investors will scan the issuer's balloting results announcement to get a gauge of market demand for the offer. Issuers are required to disclose a subscription rate "reflecting the true level of demand for the offer". Problem is, the rulebook does not specifically say how the subscription rate should be counted. That leaves room for creativity.

And depending on how aggressive the underwriter wants to be, balloting results are looking more like marketing documents.