What are Underwriters ?
An IPO is the process of selling shares of a previously private company on a public stock exchange for the first time. IPO underwriters are financial specialists that play a key role in a company’s IPO process.
IPO underwriters are normally investment banks that have IPO specialists on staff.
These investment banks work with a company to ensure that all regulatory requirements are satisfied. Next, the underwriter contacts a large network of investment organizations, such as mutual funds and insurance companies, to gauge investment interest.
The amount of interest received by these large institutional investors helps the underwriter set the IPO price of the company’s stock. The underwriter also guarantees a specific number of shares will be sold at that initial price and will purchase any surplus.
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