IPO: Birdsville Biosys issues an IPO sold on a best-effort basis. The company's investment bank demands a spread of 18 per cent of the offer price, which is set at $25 per share. Four million shares are issued. However, the bank was overly optimistic and eventually is able to sell the shares for only $23 per share. What are the proceeds for the issuer?

Question

Quizplus · Accepted Answer

The proceeds for the issuer are calculated as the number of shares sold multiplied by the price per share minus the spread. Here, 4 million shares are sold at $23 each, and the spread is 18% of the $25 offer price, which is $4.50 per share. So, the proceeds are 4 million * ($23 - $4.50) = $74 million.

IPO: Birdsville Biosys Issues an IPO Sold on a Best-Effort