THE withdrawal of Cromwell Property Group's initial public offering (IPO) of its European Reit was disappointing as it would have raised an estimated S$1.2 billion, an amount that would have made it the local market's second largest float of the year.

Although the company cited "market conditions" for the withdrawal, observers reckon the reason could have been a lack of understanding of a complex product - Cromwell's Reit assets were in six European countries and comprised a mix of fully and partially-owned freehold and leasehold properties with differing structures depending on jurisdiction.

On the surface, the Cromwell episode suggests that Singapore investors prefer straightforward, non-complex products with more transparent structures. Maybe so. But if this assessment is accurate, then the bigger disappointment than the IPO being withdrawn is to learn that the financial industry here lacks the necessary sophistication and expertise to properly evaluate non-standard financial instruments.