New IPO With Free Warrants – “Caveat Emptor”

Written by Editor

Giving free warrants to IPO subscribers has resurfaced in Bursa Malaysia this year after many years of absence.  Sunway Infrastructure Berhad was the first company who gave away free warrants when it was listed in 2003.  This year, MClean Technologies and soon to be listed Hibiscus Petroleum are the ones who give free warrants to IPO subscribers.  Unfortunately, giving away free warrants also means that the IPO price is overpriced.  Investors who are attracted to the free warrants attached to IPO must know that the warrant is actually “not free” because the “overvalued” IPO price will most likely drop due to profit taking.  In any case, investors should wonder why is there a need to give away free warrants at IPO stage.


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