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Indication of Interest (IOI)

An Indication of Interest (IOI) is a non-binding declaration by a potential investor or buyer that they are interested in purchasing a certain number of shares or securities during an upcoming offering or transaction, such as an IPO or secondary share offering. It allows the underwriters or sellers to gauge demand before finalizing the terms of the offering. An IOI does not obligate the investor to purchase the securities but gives the issuer a sense of potential market interest.

Example

Before the launch of an IPO, an institutional investor submits an IOI indicating interest in purchasing 100,000 shares, helping the underwriter assess overall demand.

Key points

• Non-binding expression of interest in purchasing securities.

• Helps underwriters gauge demand for upcoming offerings.

• Often used in the lead-up to IPOs or secondary offerings.

Quick Answers to Curious Questions

To express preliminary interest in a potential offering and position themselves for priority in allocations when the final offering terms are set.

No, an IOI is non-binding and does not obligate the investor to follow through with the purchase.

Underwriters use IOIs to assess demand and set appropriate pricing and allocation strategies for an offering.
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