#MONEY
I’ve read more IPO prospectuses than I care to count. Thirty years in newsrooms will do that.
Every one of them shows a company on its best behaviour.
What I never saw was the scrubbing that happens before.
So on the latest Beyond the Prospectus, a collaboration between Do More and Aurum Story, Stephanie Ng and I asked the man who does the scrubbing.
Ong Eu Jin of Ong Eu Jin Partnership is an IPO lawyer whose firm handled more than a dozen Bursa Malaysia listings last year.
His favourite line from founders in pitch meetings?
“Don’t worry, we comply with all relevant laws. Can we have a discount?”
He believes them.
But they just don’t know what they don’t know.
An awning nobody approved. A factory extension with no completion certificate.
A worker hostel nobody inspected.
None of it matters until you try to list.
Then every item has to be fixed or disclosed.
Eu Jin reckons at least four of his 2025 listings should have happened a year or two earlier, but the legal clean-up held them back.
Then there are the founders who hide things.
One “sold” a factory that could never be licensed to a clerk. On a clerk’s salary.
I laughed. The regulators didn’t. So I asked what I’d ask about my own money.
Does the uncle at the pasar borong care about any of this?
He just wants the price to go up and pay a dividend.
Eu Jin was refreshingly blunt.
Most investors don’t care about compliance.
They care about losing money.
The due diligence catches what can hurt earnings: a main plant without a licence can be shut down tomorrow.
Much of the rest is about proving the company can govern itself.
But here’s the rub: clean is not the same as cheap.
Last year was Bursa’s busiest year for listings in two decades.
The Edge Malaysia writes that of the 55 companies listed on the Main Market and ACE Market, two-thirds were trading below their IPO prices as at Dec 19.
But every one of them had passed the scrubbing.
The lawyers make sure a company is what it says it is.
Whether you’re paying the right price is up to you. If you read nothing else in a prospectus, Eu Jin says to read three sections: The business overview. The risk factors. And the financials: does the track record back up the story?
I’d add one more: who’s selling.
New shares raise money for the business.
Old shares (disguised in IPO lingo as ‘Offer For Sale’) fund the founders’ exit.
Know which you’re buying. (Hint: Offer For Sales are massive red flags.)
At our age, with retirement money on the line, an IPO is the one time a company has to show you almost everything.
The lawyers have done their homework.
Let’s do ours.
Not financial advice. Beyond the Prospectus is co-produced with Stephanie Ng of Aurum Story.
#investment #IPO #retirement #NFA
