The Essentials of IPO Investing: What To Know Before You Buy

By Gwendoline Tan

If you’ve only got a minute:

An IPO is when a private company lists its shares on a stock exchange, making them available to the public for the first time.
Social media can fuel excitement, but it’s important to look past the buzz and focus on the company fundamentals.
Study the prospectus carefully to assess whether the price valuation makes sense.

In Singapore, Initial Public Offerings (IPOs) don’t come around often. But when they do, they tend to draw plenty of attention. The prospect of being among the first to invest in a newly listed company can be alluring, especially if it involves prominent companies in fast-growing sectors.

At its core, an IPO occurs when a private company lists its shares on a stock exchange, thereby making them available to the public for the first time. This mechanism provides investors with an opportunity to acquire a stake in a company at the start of its journey as a publicly traded entity.

IPOs in Singapore

While 2024 was relatively quiet with just 4 IPO listings, the lowest since 2011, momentum has picked up.¹

In 2025, we saw the listings of Info-Tech systems and NTT DC REIT, the largest real investment estate trust (Reit) IPO on the Singapore Stock Exchange (SGX) in over a decade.² The public tranche for this was reportedly 9.8 times oversubscribed, showing strong investor interest.

More recently in September 2025, accommodation provider Centurion Corp spun off several properties into a Reit that was listed on the SGX, raising approximately S$1.5 billion.³

These offerings are coming amid regulatory incentives implemented by the Monetary Authority of Singapore (MAS) to revitalise the local equity market.

While a successful debut can lead to rapid price appreciation, IPOs should primarily be evaluated based on the long-term growth prospects of the business or its operating sector. Newly listed companies can be difficult to evaluate, since they lack the track record of established firms.

Hype vs reality

With today’s ease of information sharing, IPOs often generate a lot of buzz.

Studies show that pre-IPO hype, particularly on social media, can inflate first day trading prices, averaging nearly 30% gains versus about 18% for less-hyped listings.⁴ But this excitement doesn’t always last. Many of these “hyped” IPOs underperformed in the long run after inflated expectations faded.

In short, while social media chatter can fuel a strong debut, it doesn’t guarantee lasting success. This is why it is important for investors to look past the noise and focus on fundamentals, carefully weighing the risks against the benefits.

What to look out for

Study the details included in the IPO prospectus, a comprehensive document every listing must provide, to decide if its valuation makes sense for you as an investor.

Here are 8 areas to pay attention to.

1. Company fundamentals

Review the company’s business model, competitive strengths, strategies, and track record. Is it profitable, and has it built a stable customer base? Does it operate in a sector with long-term growth potential, like tech or data infrastructure?

For example, the recent NTT DC REIT IPO drew investor confidence because it was backed by NTT, a well-established data centre operator and part of Japan’s telecommunication giant, Nippon Telegraph and Telephone Group.

2. Financial health

Financial data in the prospectus will give you an idea of the company’s overall financial health. Examine revenue, profitability, and debt levels over the past few years. Even with limited data, this can still give you a sense of the company’s financial standing and growth trajectory upon listing.

3. Use of proceeds

Check how the funds raised from the IPO will be used as this signals management’s priorities and growth plans. This includes expansion, acquisitions, debt repayments or other purposes.

Companies reinvesting into their business growth often have stronger long-term prospects and may serve as a more stable investment opportunity.

4. Valuation

Compare the IPO pricing with similar companies in the same sector.

A high valuation typically signals strong growth expectations, yet it also places considerable pressure on a newly listed company to deliver exceptional performance. That said, determining a reliable valuation for an IPO can be particularly difficult, as there is no established market pricing history before its public debut.

For example, Uber’s IPO in 2019 was priced at US$45 per share due to strong growth expectations. However, it closed below S$42 per share on its debut.⁵ It was only in 2023 after demonstrating a path to profitability that it consistently traded back above its IPO price.

This shows that initial market sentiment and trading activity can lead to a lower price than the IPO valuation, and that patience and due diligence are important. Over time, share prices can stabilise and waiting can sometimes lead to better entry points after the initial volatility.

5. Management and governance

Assess the experience of the leadership team and the governance structures in place. Strong, credible management often plays a large role in long-term success as they oversee the daily operations of the company and make key business decisions.

When examining the team, consider their experience, remuneration, reputation. Also, note if founders or key leaders hold significant stakes in the company as this often suggests their interests will align more closely with maximising shareholder value.

6. Risks disclosed

The prospectus also outlines potential risk factors, depending on market, political, or economic conditions.

These include market competition, overreliance on any key stakeholders, or regulatory challenges, highlighting where the company may be vulnerable. Carefully consider if you can tolerate the associated risks before investing.

7. Size of offering

Look at how much capital the IPO aims to raise and the offer price per share.

Larger offerings can attract stronger institutional interest and create more liquidity after listing, while smaller ones may see more muted demand.

For example, the NTT DC REIT IPO raised US$773 million at an offer price of US$1.00 per unit. It later opened trading slightly higher at US$1.03 before stabilising back at its offer price.⁶

In contrast, many companies listed on the Catalist (SGX’s board for fast-growing smaller companies) tend to raise smaller sums (i.e. under S$50 million), which can limit trading activity after listing.

For investors, higher liquidity makes it easier to enter or exit positions. If you need to sell quickly, low liquidity may make it harder to find buyers and could push prices down further.

In addition to public tranches aimed at retail investors, the majority of IPOs incorporate a placement tranche. This is offered to a specific group of investors like institutional investors, financial institutions, or high net worth individuals.

Furthermore, some companies may choose to raise capital exclusively via private placements, without making shares available to the general public.

8. Market conditions

Timing matters. IPOs launched in strong sectors or during bullish markets may see more demand, which can better support pricing and performance. Conversely, when sentiment is muted, listings may struggle to gain traction even if the company has solid fundamentals.

This is why we tend to see companies choosing to go public during favourable conditions like periods of low interest rates or when the broader economy is in recovery or growth. This can boost investor appetite and help ensure a stronger debut.

Tips for managing risk

Even if an IPO looks promising, it is wise to approach any investment with care.

Start small and diversify

Avoid putting too much of your funds into a single IPO. Diversify and balance your portfolio with other investments like well-established stocks, exchange-traded funds (ETFs) or unit trusts.

Read more: Diversify to help manage investment risks
Find out more about: CIO Insights Funds

Be patient and watch lock-up periods

Newly listed shares often take time to stabilise. Also take note of lock-up periods, typically a 180-day window after an IPO lists, during which company insiders, founders, or early investors are restricted from selling their shares.

Once it is over, these investors may choose to cash out their shares to take profits, causing a sudden increase in shares available for trading. This can put downward pressure on the company’s stock price, sometimes creating better entry points for patient investors.

Applying for an IPO

IPOs in Singapore usually open for subscription just a few days before the listing date, with strict deadlines. The prospectus provides a timeline of application and trading dates. You can also find the details from brokers, or on the SGX website.

Missing the cut-off means waiting until open-market trading, when prices may have moved. However, it is still important to review the prospectus carefully and not rush into any decision.

If you are interested in applying for an IPO, you will first need a Central Depository Account (CDP) to hold your shares upon successful application. Note that opening one takes up to 2 days, so set it up early before subscribing.

Find out more about: CDP Application

You may apply for IPOs via the ATM or digibank (online and mobile). Simply select “Electronic Securities Application” under the “Invest” menu and follow the instructions on screen.

Find out more about: Electronic Securities Application

New to investing?

Today, participating in an IPO is a straightforward process.

But if you are new to investing, it is a good idea to start with diversified products such as ETFs or unit trusts, which give you instant diversification at lower costs and overall risk levels. Applying for IPOs can be more costly, since building a diversified stock portfolio on your own often requires more capital and effort.

For beginners, it is important to stay focused on being consistently invested to ride out market fluctuations, rather than chasing individual IPO opportunities. One practical way to do this is through a regular savings plan like Invest-Saver, which allows you to grow your wealth through repeated contributions over time.

In conclusion

IPOs can be exciting investment opportunities, but they also carry unique risks.

By looking past the hype and carefully assessing the fundamentals, financial health, and market conditions, you will be better equipped to decide if an IPO fits your financial goals and risk appetite.

And remember, you do not need to rush in on day one. Sometimes, waiting and observing how the stock performs after its debut can be just as rewarding as joining the ride from the start.