Describe two ways in which venture capital firms structure

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Fidget Spinners Inc. makes an initial public offering of shares to raise $260 million, at an offer price of $3.25 per share. The issue is underwritten at $3.10. The costs of preparing the prospectus, legal fees, ASIC registration and other administrative costs add up to $750,000. The firm's share price closes at $3.90 on its first day of trade.

Two years later, Fidget Spinners Inc.wants to raise another $26.9 million to finance a new investment project through a seasoned equity offering at $65 per share, and the underwriter charges a 8.5% spread.

Problem a) Describe two ways in which venture capital firms structure their funding to reduce risk.

Problem b) Calculate the IPO underwriting spread.

Problem c) Calculate the IPO underpricing.

Problem d) How many shares have to be issued through the SEO?

Reference no: EM132912543

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