IPO, or Initial Public Offering, is when a company first decides to go public, and thus selling their shares to the general public. This is a contrast to a private company, where the share equity is held by a few people and that these people generally cannot sell out their shares freely.

In most IPOs, there are 2 pools (or better known as tranches) of shares, the public tranche and the private tranche.. In the private tranche, these shares are placed with institutional buyers.. Such as banks, or private equity firms, or basically, big investors. The public tranche are the ones we commonly know as public offering. This public tranche is the one where people ballot for it using internet banking, or ATM, etc..

In the Singapore context, it's usually something like 70-90% of IPO shares offered for private placement and 10-30% are for public balloting.. It is actually possible access the private placement, but you probably need to have a lot of money or you join the IPO clubs in certain brokerage houses.. (IPO clubs are basically this group of people who opt into this 'club' where they have an obligation to take up a certain amount of IPO shares for every IPO that this 'club' is offered. So you can't say no, even if the IPO looks like a lousy one.)

To make it simple, we just call public offering as IPO application.. Since thats what most of us know.

For IPO application, minimally you need a CDP account. However, it might simplify your process to just open a brokerage account with one of the firms in Singapore. That's because you need a brokerage account to sell the shares you are allocated. When you open a brokerage account, they will also open a CDP account at the same time. The common brokers are listed on the sidebars.

And just to clarify, when you apply for IPO via ATM or internet banking, you are actually just balloting.. What that means is that you are not guaranteed the allocation of the shares you applied for. EG: If there is a 30cents share for IPO, and you apply for say 30lots, (which will cost you $9000), Chances are you will only get 1 or 2 lot at max. Usually you will get zero. On top of that, you need to pay an application fee of $1 or 2.. Of course, they will return the excess money that did not get allocated any shares.

That said, not all IPOs are making good profit nowadays due to the bad market sentiments..

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