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 ?
5 million, after deducting underwriter discounts, commissions and estimated offering expenses.
23 million, after underwriter discounts, from the sale of the over-allotment shares.
665 per share and the company received proceeds of approximately $383,000, after underwriter discounts.
Total net proceeds to Edgen from the offering, after deducting underwriter discounts and commissions and estimated offering expenses, are approximately $150.
The company received proceeds, after underwriter discounts, placement fees and other expenses of $9.
In addition, the Company has granted the underwriter an option to purchase up to 2,000,000 additional shares from the Company at the offering price, less underwriter discounts and commissions, within 30 days.
10, the Company granted the Underwriters a 30-day option, exercisable from the date of the final prospectus supplement on November 15, 2006, to purchase up to an additional 90,045 shares of its common stock at the public offering price less underwriter discounts and commissions.
All expenses of the selling stockholder associated with the offering, other than underwriter discounts and commissions, will be borne by the Company.
The Company has granted the underwriters a 30-day option to purchase up to an additional 90,045 shares of its common stock to cover over-allotments, at the public offering price less underwriter discounts and commissions.
Total net proceeds to the Company from the offering, after deducting underwriter discounts and commissions and estimated offering expenses, are approximately $198,807,813.
8% of the IAC operating partnership, is purchasing an additional 1,394,194 IAC operating partnership units at the company's net price which excludes underwriter discounts and commissions.