Bids and Allocations in European IPO Bookbuilding (Discussion paper series)

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

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Abstract

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: 27 Feb 2017 13:46
Funders: N/A
URI: http://eureka.sbs.ox.ac.uk/id/eprint/2829

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