A broker here is offering us to buy shares worth 1 Million USD and pay 100,000 for the time being, assuming that the IPO will be around 10 times oversubscribed. If that eventually happend and it WAS oversubcribed then one will garanttee buying shares worth 100,000 without DP world returning back to him the excess amount. If the oversubscription was less than 10 times (e.g 13 %) I should secure the reamining 3%, and if the oversubcription was more than 10 times the company will return the excess money back to me.
How do you weigh the risk here? Of course one should assume a 3 % (plus minous), but incase there wasen't an oversubcription I will definitly be cornered !
A broker here is offering us to buy shares worth 1 Million USD and pay 100,000 for the time being, assuming that the IPO will be around 10 times oversubscribed...
Hi Sciptic and welcome to Dubai Share Talk .
Where's "here"?
There's a restricted list of brokers who can do the IPO - see the DP World IPO information. I would be wary of dealing with any other broker.
And I thought that UAE rules were that leveraging (through a bank) could only be a maximum of 5x for IPOs - but the DP World IPO operates under a different regulatory authority from all previous UAE IPOs, so that may have changed. _________________ UAE IPO list | posting guidelines
Actually its one of the authorized listed brokers. I had a meeting at thier Offices and they know exactly what they are doing...They ARE trustable I mean..
They charge 1% comission
So....would you take the risk on the oversubscription??!!
Actually its one of the authorized listed brokers.
Then I wouldn't be concerned about it being any sort of scam.
Who wrote this:
They charge 1% comission
That's odd. The rate is supposed to be 0.5% commission. Or is that commission on the leveraged amount?
Who wrote this:
So....would you take the risk on the oversubscription??!!
Hmmmm. Tough question. Shares don't look like a bargain to me, and I don't know how heavily it's being subscribed for.
If it was 10x oversubscribed, that would mean they'd collect up to $44 billion, or AED 160 billion. That's a fair sized sum of money, although not quite as much as the AED 190 billion that the DFM IPO collected this time last year. It was 300x oversubscribed (yes, I know the numbers don't add up ... 300 x 1.6 bn = 480 bn ... but I'm just quoting from their press release).
I'd wait and see if there's any information this week on demand for the DPW IPO shares. It will give you a better idea of whether or not to leverage. _________________ UAE IPO list | posting guidelines
It was 300x oversubscribed (yes, I know the numbers don't add up ... 300 x 1.6 bn = 480 bn ... but I'm just quoting from their press release).
Well, i think
1.)the Dh1.6 billion initial public share offer of the Dubai Financial Market has been oversubscribed 125 times and collected Dh201 billion.
2.)The IPO's public tranche, excluding the quota for UAE nationals, has been oversubscribed a staggering 308 times
Opportunity
1. DP World is considered as the largest port operator in the world to be listed
2. Solid company and backed by Dubai goverment
3. Recent UAE stock rally
4.Dubai's government will have been keen to price its ports business attractively, given that it will be the first big primary listing on its fledgling DIFX.
Risk
1. DIFX - untested platform (look at the volume done FY2006 is less than $27 mil)
2. Vague financial statement (Only 22 of DP World's 42 ports are consolidated. Capital expenditure forecasts appear understated. )
3. For those who apply using bank borrowings, you have to evaluate if the subscription rate is low with higher % success ratio. Can you take up so much shares in the end and not got caught?
Personally, i doubt the syndicate / big boy will go in a big way unless they are long term investors.
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