IPO pricing: Pau, Inc., issues a $38.6 million IPO priced at $12.50 per share, and the offering price to the public is $19.30 per share. The firm's legal fees, SEC registration fees, and other administrative costs are $270,000. The firm's stock price increases 18 percent on the first day. What is the underwriting cost?

Question

Quizplus · Accepted Answer

Underwriting cost = (Offering price - IPO price) * Number of shares - Legal fees, SEC registration fees, and other administrative costs= ($19.30 - $12.50) * 3,100,000 - $270,000= $13.6 million

IPO Pricing: Pau, Inc