Dual Listings

[Musicwhiz]

Just thought I'd start a thread on this, as it seems the dual listing "fever" has yet to die down after so many months!

Latest candidates:

1) Courage Marine (SEHK)
2) Sunmart (KOSDAQ)

Just add to the list as we go along. Amazing how these companies can use this tactic to raise more capital. It's been going on for quite some time and I thought it was about to stop, but nope.

[Nick]

I don't think most of them choose to raise capital. They list via introduction.

[freedom]

maybe initially they list via introduction. that's not their final aim.

higher valuation helps them in the future equity raising exercise.

[Musicwhiz]

Sorry my mistake. Sunmart is delaying its listing on KOSDAQ. Please see news article.

Business Times - 18 Jan 2011

Sunmart postpones dual listing in Korea

By ANGELA TAN

Sunmart Holdings Limited said it has decided to postpone the proposed dual listing on the KOSDAQ market of the Korea Exchange.

It intends to submit a fresh listing application to the KRX in April 2011.

Sunmart said this is because it has failed to reach an agreement on the subscription price of the depository receipt with the underwriter, Daewoo Securities Co Ltd.

'As such, the company has decided to postpone the proposed Dual Listing until after the financial statements of the Company for the financial year ended 31 December 2010 has been adopted at the annual general meeting of the company,' it said.

The company was planning to issue up to 200 million new shares which will underlie the issue of up to up to 20 million depository receipts on the KOSDAQ market of the KRX.

[victor0306]

Hi all,

May i know whether dual listing affect the shareholder such as duliting the share ?

Cheers

[lonewolf]

I'm going to play the devils advocate here and says that dual listing is a farce and a gimmick. And that it does nothing to add shareholder's value (except for the initial orgasmic euphoria).

Even the much-touted arbitrage opportunity may not present itself readily in the share of the stock.

Medtec (vested) is dual-listed in SGX and TDR - long before dual listing was fashionable. It was last traded at TWD 4.21 on TDR or SGD0.2169. It ss trading on the SGX at S$0.09. Despite the persistent wide parity, you can see that Medtecs price on SGX has been flat for more than 2 yrs since the last bear.

Some companies seek a dual listing to improve the valuation of the stock. If that is the intention, perhaps it may be better to just delist from SGX and list elsewhere?

[Nick]

I can understand if a large company like Prudential seeks dual listing - to cater to a larger investor base and have 24 hour stock trading etc. But no reason for a small company whose market capitalization doesn't even exceed $0.5 billion to seek dual listing !

[Musicwhiz]

I'm going to play the devils advocate here and says that dual listing is a farce and a gimmick. And that it does nothing to add shareholder's value (except for the initial orgasmic euphoria).

I think you and I are in agreement on this. I also think it's a marketing ploy to gloss up the press releases and make it sound good, but beyond that there is no change to the business and hence valuations should not be affected either.

[mikh]

i think a dual listing away from SGX signifies lack of confidence that an SGX listing maximises recognition of the stock value. Hence i wonder if dual listings are pre-cursors to delisting on SGX. Its a tentative first step for that firm.

Other than that, it gives secondary market presence. One reason why companies (who do not need capital) list. One can question how effective this is in a secondary listing.

There should also be some regulatory and cost requirements at the secondary listing but i imagine it cannot be same as a primary listing. Therefore, there should be some trade-off or perhaps some loopholes (?). That means, some kind of back door entry?

[freedom]

some dual listing are vendor-sale, so managements or substantial shareholders get more money by selling their shares.

some dual listing are issuing part of the placement.