X 1.17 - Placing

Discussion in 'CT2' started by jensen, Sep 15, 2010.

  1. jensen

    jensen Member

    Hello

    The question asks for the relative merits of different methods for issuing shares.

    My understanding for placing is that it does not cost much as there is no underwriting. However, in the solution it states that the amount to be raised is known because the price is fixed.

    Are we assuming that all the investors approached by the issuing house will buy the shares?

    Many thanks.
     
    jensen, Sep 15, 2010
    #1
  2. Simon James

    Simon James ActEd Tutor Staff Member

    Maybe not all the investors approached but sufficient numbers of them. The issuing house will do its homework, discuss the issue with potential investors and it will have a fair idea who is interested in buying the shares. If it is not confident about placing the full issue it may renegotiate the terms to ensure it is fully placed (otherwise it's embarrassing to the company and the issuing house).
     
    Last edited: Sep 16, 2010
    Simon James, Sep 16, 2010
    #2

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