Glossary
Underwriter
An investment bank that buys IPO shares from the issuer and resells them to investors.
An underwriter in a US IPO is an investment bank that signs an underwriting agreement to purchase shares from the issuer at the offer price and resell them to investors. In a firm-commitment underwriting — the standard structure — the bank takes the risk that demand at the offer price is sufficient.
Underwriters are organized in a syndicate. The lead-left bookrunner is the most senior bank, listed first on the prospectus cover and primarily responsible for managing the book and the pricing call. Other lead and joint bookrunners share the work and the economics; co-managers play a smaller distribution role.
The underwriting discount — the spread between the offer price and the price the bank pays the issuer — is typically about 7% for traditional US IPOs, though it scales down for very large deals.