What are the steps involved in an IPO? Discuss “Best effort basis”, “Underwriting”, “Roadshows” and “Book-building”.

Expert Solution

In best Effort Basis the investor Banker agrees to sell maximum shares to investors but does not pledge to sell all its shares.
The investor banker does all activities to place maximum shares.

Underwriting : Investment banker help to sell the securities in the market or in some some case buy it themselves and later sell it in the market and they charge underwriting fees.In IPO underwriters help in a smooth listing of company as well as the sell at fair price for the company.

Road Shows : Investment Banker travel across the length and breadth of country presenting the prospect of the company to potential investors and analysts so that they can invest in the company.

Book Building : It helps in price discovery of the share by anticipating the demand of shares . Based on their survey and the interest developed by investor they can predict the range of price of share the company can achieve.

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