Gross spread

(redirected from Underwriter Discount)

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 ?
As mentioned earlier, when expressed as a yield, interest cost is composed of both the reoffering yield and the underwriter discount. The underwriter discount is generally a much smaller piece of the overall interest rates.
The variables used to build Mun-Ease databases include the dated date, delivery date, coupon date, principal payment dates, term dates, expected retirement dates, principal amounts of maturities, coupon rates, call price, credit enhancements, underwriter discount, original issue discount and miscellaneous costs.
Following deducting the underwriter discount and commissions, the company raised proceeds before expenses of USD17.88m.
The selling shareholders plan to grant the underwriters with a 30-day option to purchase up to an additional 666,244 shares of common stock at the public offering price less the underwriter discount.
Oncolytics has also granted to the underwriter a 30-day option to purchase up to an additional 692,965 common shares and/or warrants to purchase up to 692,965 common shares, at the public offering price per common share and warrant, less underwriter discounts and commissions.
The bank underwriter discounts fees, especially for firms with higher costs or more asymmetric information.
Before deducting the underwriter discounts and commissions and other offering expenses and excluding any exercise of the underwriters' option to purchase additional shares, the company expects gross proceeds from the offering of approximately USD300m.
With regard to the economics of multi-year policies, the underwriter discounts the premium to offset the single aggregate limit applied to the longer term of the policy.
The company said it expects to receive net proceeds of approximately USD44.6m, or about USD51.4m if the underwriters exercise their option to purchase additional shares, after deducting estimated fees and expenses that will include underwriter discounts and commissions.
Before deducting the underwriter discounts and commissions and other offering expenses, the company raised gross proceeds of approximately USD127m.
After deducting underwriter discounts and commissions and estimated offering expenses, the company raised approximately USD82.7m in total net proceeds.
After underwriter discounts, commissions and estimated offering expenses have been deducted, the company anticipates that net proceeds from the offering will be approximately GBP9.5mn.