What does it mean for CREIT if most PSE EASy subscribers received full allocations?
I’ve received many reports from Barkadans and seen many messages in all the usual forums indicating that many (most/all?) investors that applied for subscriptions to the Citicore Energy REIT [CREIT 2.55 pre-IPO] IPO received full allocations, even though we can safely assume that the institutional bucket/tranche was oversubscribed, as were many of the broker buckets/tranches.
The question, about what it means for the CREIT IPO to be oversubscribed with respect to the institutional and broker tranches, but not the PSE EASy tranche, is hard to answer with any certainty.
In practical terms, it might just mean that this IPO attracted a higher number of “big-account” investors (“whales”, in crypto-speak) that soaked up the institutional and broker tranches relatively quickly with a small number of huge orders, but that the retail demand wasn’t able to exhaust the PSE EASy tranche so easily due to the subscription limit.
While take-up of the PSE EASy tranche is considered by some to be a proxy for retail’s interest in an IPO, selling out of shares in the PSE EASy tranche is actually something that hasn’t happened that often.
The last time it happened, with AllDay Marts [ALLDY 0.57 unch], the PSE was caught trying to figure out what to do in real-time as thousands of investors required substantial refunds for fractional PSE EASy allocations.
ALLDY was oversubscribed across all tranches, but if you remember, ALLDY hit the ceiling on its first day (+50%), then started a grueling 3-month nose-dive that erased all those gains within 40 days and that continues to this day, with the stock currently sitting 5% below its IPO offer price.
The next IPO, Medilines Distributors [MEDIC 1.04 3.70%], apparently oversubscribed on its institutional tranche, but nothing else. We all know the tragic hilarity that ensued. Solar Philippines NEC [SPNEC 2.08 2.97%] was after MEDIC, and became oversubscribed institutionally and at the broker level, but not at the PSE EASy level.
SPNEC has doubled in price since its debut nearly two months ago.
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Selling out the PSE EASy tranche is a rare occurrence, and when it does happen (like with ALLDY), it’s not all that great for IPO investors beyond the first few days of elevated pricing.
CREIT’s oversubscription profile (institutional and broker tranches oversubscribed, PSE EASy apparently not oversubscribed) matches most closely with SPNEC’s case, but as we’ve covered in previous MBs, it’s dangerous to draw too many conclusions on CREIT based on SPNEC’s case because of the structural differences between the offerings (REIT vs non-operational company) and their vastly different approaches to solar power development (land lease vs joint venture development).
While both CREIT and SPNEC may go down as having sold out their institutional and broker tranches, their post-IPO performances may vary considerably in a way that doesn’t follow from their seeming pre-IPO similarities.
So, what does it mean?
Probably that there’s demand for that relatively high and stable dividend among those with deep pockets and a desire to find stores of value that can assist against inflation, but that retail’s demand for that kind of thing might be somewhat less rabid.
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Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.
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