IPO pricing: Black Stump, Ltd., a technology company in St Kilda, Melbourne, issues a $66 million IPO priced at $17 per share, and the offering price to the public is $22 per share. The company's legal fees, ASIC registration fees, and other administrative costs are $350,000. The company's share price increases 15 per cent on the first day. What is the underpricing on this issue?

Question

Quizplus · Accepted Answer

Underpricing = (Offering price - Issue price) * Number of shares= ($22 - $17) * 3,000,000= $5 * 3,000,000= $15,000,000

IPO Pricing: Black Stump, Ltd