8. What is Underwriting of Securties by Investment Bank?

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In this video, we discuss what is underwriting by Investment Banks and how they essentially ensure the fundraising of the company going for an IPO.

What is Underwriting?
When a firm looks to raise funds from the public, then they approach investment bankers to help them go to market, find investors etc. One of the functions of investment bankers is to ensure that the fundraising is a success.

Underwriting means that if for some reason during an IPO, the firm is unable to raise the funds that they are looking for, then the Investment banks will compensate them by buying the unsold amount.

For example, if company A is going for an IPO and was looking for $100 million public money. If due to some reason they are able to raise only $20 million. In this case, underwriting Investment Bank will purchase the remaining $20 million and sell the stock whenever there is a profit opportunity.

Here is the link to all the parts of Investment Banking Tutorial

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Really clear with nice examples, thanks man.

hobbinods
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Good sir i have have one doubt loan syndication process also providing underwriting service sir investment bank once tell me sir good video sir

PavanKumar-qtru
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How does underwriting work for a secondary offering ?

kirankumarsukumar