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Initial Public Offerings: The mechanics and performance of IPOs by Arif Khurshed

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Chapter 3: Mechanics of IPOs

In this chapter I discuss the mechanics of an IPO. I start with a look at different methods of flotation that are available to UK IPOs and then provide the timetable of an IPO. I also provide a discussion of how underwriters price IPOs by using an example of a hypothetical firm – this is an interesting area and one where not much has been published. The later sections of the chapter discuss how IPO shares are applied for, how IPO shares are allocated and how IPO shares are traded.

3.1 Methods of flotation [36]

In the UK, a firm planning a listing can choose different methods of conducting an IPO. These methods have different implications both for potential investors and the firms themselves. The two main methods ...

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