The first IPO of the year was a SUCCESS! One Great Studio’s IPO closed early because it was oversubscribed… so does this mean the market is ready for more?

So, even though it came late, IPO season kicked off with a bang! One Great Studio’s initial public offer closed one day after it opened. 

According to a press release from 1GS, they received over 4,000 applications, and the offer was quickly oversubscribed. 

That’s 338 million shares priced at a dollar each – all sold out within a day!  And people wanted more!  Just how much more? I don’t know yet.

I tried to find out but was told that information wasn’t available yet.  And it is an important piece of info because it would help us predict the basis of allotment – that’s how many of the shares you applied for that you would actually get.  It would also help us gauge the temperature of the market for another IPO.  If it was say, five or ten times oversubscribed, then we would know there’s a lot of people with money out there just waiting for an opportunity to invest in an IPO.

Now going back to the basis of allotment.  This can make or break the stock’s first-week performance.  If the allotments are low, there will likely be a lot of people fighting to get more shares, which will send the stock price higher. 

Regardless of the allotments though, having an oversubscribed offer is great news for 1GS, and even better news for the Jamaica Stock Exchange.

The local investment sector has been taking a beating this year between the SSL scandal, high-interest rates, the economy, NCB’s volatility and not to mention the iCreate drama. 

Investor confidence has definitely been shaken, and a lot of companies have put their IPO plans on hold. One Great Studio was the first to take the leap.

Our analysts on Taking Stock said that this IPO would be a litmus test for the market, to see how ready and receptive investors are for new offers. And I think this was a good reaction to the first offer of the year.

1GS also benefited from having more time between the date their prospectus came out and the actual IPO opening. 

The prospectus dropped on August 11 and the offer opened on August 28. So, 1GS had enough time to promote themselves, and investors had enough time to do their research, get familiar with the company and decide if it’s a good investment for them. 

Like I said before, we’re still waiting on the basis of allotment so keep an eye out for that and then we’ll see how the stock performs after it lists.

And that’s the bottom line.