IPO underwriters are group of representatives from investment banks
An IPO underwriter is an intermediary that undertakes the risk of purchasing the shares in case of an IPO under subscription.
IPO underwriting is a process wherein the underwriter and the issuing company get into an agreement wherein the underwriter agrees to purchase the unsold shares of an IPO in return for an underwriting commission.
The underwriting commission is a fee charged by the merchant banker in its capacity as the underwriter for entering into the underwriting agreement. It is the fee an investment banker charges for underwriting an issue of securities.
For example, if it was agreed between the underwriter and the issuer that the underwriter would be responsible for selling 3% of the shares offered, and the underwriter was unable to sell all the shares, the underwriter would be responsible for the unsold shares. It would have to buy them from the issuer. Read More.
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