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> They are quite literally setting the prices of IPO's though, by fiat, and not via an auction or some other market-oriented mechanism. Er, no, it's literally
by chimeracoder 9y ago
> They are quite literally setting the prices of IPO's though, by fiat, and not via an auction or some other market-oriented mechanism.
Er, no, it's literally set by an auction (the auction occurring between the different banks who can underwrite the IPO).
A bank that is consistently able to predict the IPO opening-bell price better than the others, or is willing to accept a slightly smaller cut than the others, will win the auction, and will outperform the others on average.
- kgwgk 9y ago> the auction occurring between the different banks who can underwrite the IPO What do you mean? Do you have a reference?
- sah2ed 9y agoI wouldn't characterize the activities between banks underwriting an IPO as an auction, probably closer to a negotiation [0]. This [1] is a well-written prose from Matt Levine on the role of underwriters in working with Snap prior to their IPO. [0] https://www.bloomberg.com/view/articles/2016-01-15/uber-is-raising-more-money-from-rich-people https://www.bloomberg.com/view/articles/2016-01-15/uber-is-r... [1] https://www.bloomberg.com/view/articles/2017-03-27/banks-that-sold-snap-ipo-say-it-s-a-buy https://www.bloomberg.com/view/articles/2017-03-27/banks-tha...