Gross spread

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Gross spread

The fraction of the gross proceeds of an underwritten securities offering that is paid as compensation to the underwriters of the offering.

Gross Spread

In a public offering, the difference between the price an underwriter pays an issuer and the price at which it sells the offering to the public. That is, an underwriter pays the issuer an agreed-upon price to purchase an issue, which it then attempts to place with investors. When it places the issue, it charges the investor a certain price like any other trade. The difference is known as the gross spread; it forms the bulk of an underwriting firm's profits. See also: Fully subscribed, Overbooked, Underbooked.

gross spread

The difference in the price that an investor pays for a new security issue and the price paid the issuer by the lead underwriter. The gross spread is a function of a number of variables including the size of the issue and the riskiness, or price volatility, of the security. Also called underwriting spread.

Gross spread.

In an initial public offering (IPO), the gross spread is the difference between what the underwriters pay the issuing company per share and the per share price that investors pay. It's usually about 7%.

For example, if a stock is to be offered to the public at $10 a share, the underwriters may pay the issuing company around $9.30 per share. With millions of shares being sold, the 70 cents per share adds up to millions of dollars for the investment bank.

References in periodicals archive ?
Total gross proceeds (before underwriter's discounts and commissions) for the full 4,375,000 common units will be approximately $88 million.
Before underwriter's discounts and commissions, the company expects gross proceeds of about USD88m from the total public offering of 4,375,000 common units.
After deducting the underwriter's discounts and commission and other estimated offering expenses, the company received net proceeds of approximately USD82.
The net proceeds from the sale of the securities, after deducting the underwriter's discounts and other estimated offering expenses payable by the company, will be approximately $6.
The company expects net proceeds from the offering, excluding the underwriter's discounts and other offering expenses, to amount to around USD9.
Combined with the earlier sale, the net proceeds from the offering, after the underwriter's discounts and expenses, are anticipated to be $281.
9 million after deducting the underwriter's discounts and commissions.
Before the underwriter's discounts and commissions and estimated offering expenses, the company expects to raise total estimated gross proceeds of USD379.
2 billion if the underwriter exercises in full its option to purchase additional common units), including our general partner's proportionate capital contribution and after deducting the underwriter's discounts and commissions and estimated offering expenses.
25 per common unit for total anticipated gross proceeds of approximately USD350m, before the underwriter's discounts and commissions and offering expenses.
The net proceeds from the offering will be approximately $170 million, after the underwriter's discounts and expenses.
Before underwriter's discounts and commissions, the company expects total gross proceeds of approximately USD53m from the total offering of 2,875,000 common units.