Reach Energy, the largest SPAC listed on Bursa to date which raised some RM 750 Million from its IPO. The IPO price is 75 sen with 1 Billion shares available but 98% of the 1 Billion shares are 'place' to 'selected investors' including the cornerstone investors. For my opinion on the IPO, you can refer to my previous post:
The share price of Reach has been trending lower since its IPO to closed at 65.5 sen today. The free warrant which opened at 28.5 sen during its IPO day also trending lower ever since it listed to closed at 22 sen today. The share price of Reach at its current level is substantially lower than its IPO price of 75 sen and even lower than the pro-rata refund of the trust money per share, which workout to be around 71 sen, in case the SPAC fail to make any QA during the stipulated time frame.
What puzzling me is who is selling? The portion of the IPO shares that available to the 'Real Public' is just 20 Million shares and I seriously doubted that the lucky few (it is 42 times oversubscribed) that actually got the shares will sell at a loss. As for the warrant, well, since it is free so some may think of disposing it to put some money into the pocket. But again, who is selling? The 20 Million free warrants that the 'Real Public' entitled could be easily absorbed by the market even in the first day of trading as many investors can't get their shares during the IPO.
The promoter and the initial investor has a moratorium so they certainly can't dispose their shares. What's left is only the 'selected investors' including the cornerstone investors since there is no moratorium imposed on them. If you follow the stock since its IPO, most of the days you will see that there is huge selling pressure on this stock. But why are they selling? I assume since they are the 'chosen one' to be the cornerstone investors or the 'selected investors', they should be very confident with the management and the future of this company, so why they disposed off their shares be it ordinary shares or warrant immediately after the IPO. To make a quick buck? Not only they 'cornered' the stock during the IPO, now they 'stone' throw the stock to make a quick buck out of it. What kind of cornerstone investors are they? The ordinary folks that jump into the counter during the IPO days, which the ordinary shares traded at high as 76.5 sen and the warrant as high as 29 sen, are scrambling their heads to understand what happened? It is almost impossible for them to get the shares during IPO so they jumped into it as soon as the stock available in the market but now they are stuck with the shares that trade much lower than the IPO price. The seemingly high demand of the stock with some 42 times oversubscribed is just a joke and very misleading.
The 'selected investors' and the cornerstone investors certainly can buy or sell their shares as they like, but if they are just looking for short term gain then they should be allowed to compete with the public for the shares during the IPO. The 98% placement is just not fair to the 'Real Public' and now for those that bought at the high price will certainly force to be the 'cornerstone' investors.
How this counter will perform? I don't know. I only knows that some 'selected investors' are very happy even the stock is trades at huge discount to its IPO price.
Now even lower than when your blog post came out.
ReplyDeleteWhat do you think is going on?
To be honest, I really have no clue what is going on with this counter. Looks like the selling pressure still huge and the warrant is particularly weak so better stay out of it.
ReplyDelete