Post-IPO Japfa is not confidence-inspiring

WHEN Indonesia agri-food company Japfa Ltd listed in Singapore in August, it was widely touted as a triumph for the local initial public offering (IPO) market. With a market capitalisation of just over S$1 billion, Japfa was seen as an institutional stock that offered exposure to the fast-growing Indonesian economy as well as China and the rest of the region.

It was a story that sold well and was seen as being key in helping to restore confidence in Singapore stocks, which had fallen to one of its lowest points in recent memory.

As it turned out, Japfa's IPO did in fact generate some interest - food is after all a recession-proof commodity, so the IPO of 248 million shares of S$0.80 each was five times subscribed, whilst the over-allotment portion of 37.2 million shares was fully exercised.