Bids and Allocations in IPO Bookbuilding

Jenkinson, Tim and Jones, Howard (2002) Bids and Allocations in IPO Bookbuilding. Centre for Economic Policy Research Discussion Paper.


This Paper uses evidence from a dataset of 27 European IPOs to analyse how investors bid and the factors that influence their allocations. We have the complete books for these deals - amounting to 5540 bids - and so can analyse directly how bids and allocations are related. All these deals are private sector IPOs where the bookrunner was a leading European investment bank. We make use of a unique ranking of investor quality, associated with the likelihood of flipping the IPO, as produced by a group of US and European investment banks. We find that 'high quality' investors are consistently favoured in allocation and in out-turn profits. We also find that bids submitted via the bookrunner and large bids received better pro-rata allocations and higher average profits. We find that a very small proportion of all bids submitted during the bookbuilding contain price limits - especially in hot IPOs - and, in contrast to Cornelli and Goldreich (2001), we do not find that that such bids are favoured in terms of allocation.

Item Type: Other Working Paper
Keywords: IPOs; Bookbuilding; Bids; Allocations; finance
Subject(s): Finance
Private equity
Centre: Oxford Private Equity Institute
Date Deposited: 25 Mar 2012 19:52
Last Modified: 02 Oct 2018 15:13
Funders: N/A

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