Lead Underwriter
A lead underwriter is the primary financial institution responsible for managing a security offering, such as an Initial Public Offering (IPO) or a bond issuance. The lead underwriter coordinates the underwriting syndicate, determines the offering price, and allocates shares or bonds to investors. They also assume the greatest risk, as they often purchase the securities from the issuer and sell them to the public. The lead underwriter plays a crucial role in ensuring the success of the offering.
Example
A major investment bank acts as the lead underwriter for a company’s IPO, setting the offering price and distributing shares to institutional and retail investors.
Key points
• The primary institution responsible for managing a security offering.
• Coordinates the underwriting syndicate, sets the offering price, and allocates securities.
• Assumes significant risk by purchasing securities and selling them to investors.
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