Gross spread

(redirected from Underwriter Discounts)

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 ?
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.
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.
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.
After underwriter discounts, commissions and estimated offering expenses have been deducted, the company anticipates that net proceeds from the offering will be approximately GBP9.
After deducting underwriter discounts and commissions and estimated offering costs, the net proceeds to the company was approximately USD64.
After deducting underwriter discounts and commissions, the net proceeds to the company is about USD64.
Total net proceeds after underwriter discounts and commissions and estimated offering expenses were about USD150.