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What is an Initial Public Offering (IPO)
An Initial Public Offering, more commonly known as an IPO in Malaysia is when a private company is listed on the stock exchange and sells its shares to the public for the first time. They are usually met with much fanfare and anticipation.
4 Ways to Apply for an IPO in Malaysia
To put it simply, there are 4 ways for Malaysians to apply for an IPO:
- Manually using application forms.
- ATMs.
- eIPO – via banks.
- Online IPO subscription – via your respective brokerage.
1. IPO Application Manually via Application Forms
I have never done number 1 and I don’t think anyone is doing it this way anymore. Maybe the older generation of stock investors used to do this.
2. IPO Application via ATM
Electronic Share Application (ESA) is a facility that allows for the application of an IPO in Malaysia through an Automated Teller Machine (ATM) of the participating financial institutions. This facility is provided by both Tricor Investor & Issuing House Services Sdn Bhd (Tricor) and Malaysian Issuing House Sdn Bhd (MIH). In a nutshell, ESA is a mode of applying for IPOs in a paperless manner.
3. eIPO Application via Maybank2U
Most local banks offer this service and I myself used to use Maybank. I’ll be giving you a step-by-step guide below using Maybank because it can get a little complicated.
4. Online IPO Application via Your Brokerage (The Easiest Way)
This is by far the easiest and most convenient way to apply for an IPO in Malaysia. I use MooMoo for most of my stock investing and have used it for IPO applications as well.
Log in to your Moomoo app and review current IPO subscription announcements. Note key details such as subscription dates, price, and lot size.
Go to Markets > MY > IPO, and you’ll see a list of companies that are available for IPO subscription.
Sign up link: Moomoo Malaysia
How Does an IPO in Malaysia Work
- Preparation:
Before applying, read the prospectus carefully. This document explains the company’s background, financials, risks, and the terms of the offering. - Sufficient balance:
It goes without saying but you’ll first want to make sure that you have a sufficient amount of money in your account before applying. Take note that most platforms require you to maintain a minimum balance. - Submitting Your Application:
During the subscription period, you place your order for shares through your broker’s platform. Make sure you have enough funds in your account, as the required amount may be temporarily locked. - Oversubscription:
When more orders come in than available shares, the IPO is deemed oversubscribed. - Balloting:
In an oversubscribed IPO, all valid applications are entered into a random lottery. The balloting system determines which investors receive an allocation. This ensures that each applicant has an equal chance. - Allocation:
The lottery result assigns a certain number of shares to each successful investor. If your application exceeds the allocated amount, you only pay for the shares granted. - Finalizing Your Investment:
If you receive an allocation, the required payment is processed, and once the shares are listed on the stock exchange, you can begin trading. - Refunds:
Any funds from unallocated orders are refunded automatically. - Fees:
I was charged RM1 by the bank as a processing fee. Using MooMoo, I wasn’t charged a single cent.
End.
I am keeping this article short and simple for those of you who want to apply for IPOs in Malaysia. Hope this helped and thank you for reading!
If you’re a total newbie when it comes to investing, here’s a Guide to Stock Investment.