Wednesday, May 29, 2013

Asian Pay Television Trust (APTT) IPO balloting ratio - Part 2

Someone by the nickname of "Koopa" left an interesting comment on my previous post (Asian Pay Television Trust (APTT) IPO balloting ratio).

To ensure a reasonable spread of unit holders, the Joint Bookrunners and the Joint Underwriters, in consultation with the Trustee Manager, have decided to... allocate 66% of the units available for IPO to... 8.5% of the (successful) applicants with the deepest pockets.

I chuckled at the part on the "reasonable spread of unit holders". The numbers were quite interesting and I decided to do a breakdown to verify Koopa's calculations. The break down is as follows:

Range of units applied for ('000s) balloting ratio no. of successful applicants no. of applicants units alloted per successful appplicant total units alloted
1 0.06 42 700 1 42
2 to 9 0.08 152 1900 1 152
10 to 49 0.1 441 4410 6 2646
50 to 99 0.12 160 1333 36 5760
100 to 499 0.14 187 1336 80 14960
500 to 999 0.66 60 91 374 22440
1000 and above 0.72 32 44 750 24000
1074 9814 70000

% of units allocated in the last 2 bands:
(22440 + 24000)/70000 = 66.3%

% of unit holders in last 2 bands against no. of successful applicants:
(60+32)/1074 = 8.57%

Koopa's calculations were accurate. His/her sarcasm on the "reasonable spread of unit holders"was simply brilliant.

I shall provide another calculation to add on to the above.
% of unit holders in last 2 bands against no. of ALL applicants:
(60+32) / 9814 = 0.937%

Less than 1% of all applicants got allocated 66% of the APTT units in the public offer!!

Other thoughts
It seems this balloting ratio turns out to be bad for APTT. When APTT opened today at 2pm, the opening price was $1. It briefly went up to $1.005 for a while and then came tumbling down. At the end of the day, it closed at $0.92 (5c below the IPO price).

I think there are a couple of reasons that could have caused this
1) The higher bands were allocated much more units than they expected. Some of them may have started selling off a large part of their allocated units and triggered other investors to follow suit.

2) There is a sudden fear of rising interest rates. Many REITs and business trusts suffered a 3-6% drop today as well.

In a way, many of us were glad that we were not allocated any units from the IPO. For my APTT units allocated from my MIIF dividend, I will continue to hold them for a while for now.

Related Post:
Asian Pay Television Trust (APTT) IPO balloting ratio

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