IPO disclosure: The way info is presented leaves much to be desired

ALTHOUGH the local initial public offering (IPO) market has evolved over the past 30 years to include companies from around the world in addition to homegrown firms, the quality of disclosure has not.

When evaluating the suitability of an IPO, investors still have to rely on a prospectus that usually runs into hundreds of pages - a document so voluminous and dense that no retail individual can reasonably be expected to read it. A good example is the prospectus for latest offering Daiwa House Logistics Trust (DHLT) which runs a whopping 930 pages. It is not an isolated case - the prospectus of the preceding IPO, that of Trans-China Automotive Holdings (TCA), notched up 680 pages .

Granted, issuers now prepare a Product Highlights Sheet (PHS) to accompany the prospectus, but this is a misnomer. Contrary to its description as 1 sheet, the typical PHS is 12 pages long, contains the disclaimer that it must be read in conjunction with the prospectus, and, because issuers need to cram in as much information as possible, almost every square inch is packed with text in small font. Which begs the question: Can an average retail investor realistically be expected to scroll online through 2 documents that could add up to almost 1,000 pages in the days between offer and actual listing? Clearly, if any attempt is to be made to improve IPO disclosure, it should start with streamlining both documents, by omitting unnecessary details and presenting the vital information succinctly, in easy-to-understand language.