Explain how the shares are allocated amongst bidders

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ABC ltd is conducting an IPO through a book building process. at the end of the bidding period, ABC's investment bank has received the following bids:

Price ($) Number of Shares Bid

8.00 25,000

7.75 100,000

7.50 75,000

7.25 150,000

7.00 150,000

6.75 275,000

6.50 125,000

(a) The company would like to sell 500,000 shares, what will the offer price of the shares be?

(b) Explain how the shares are allocated amongst bidders.

(c) In IPO, correct pricing is crucial. Give reasons.

Reference no: EM132645393

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