OpenIPO

 

OpenIPO is an alternative approach to initial public offerings developed by W.R. Hambrecht & Co that substitutes an auction based system for the traditional Wall Street book-building process. OpenIPO uses an auction process to find the intersection of supply and demand in pricing Initial Public Offerings.

Just like a typical auction, the highest bidders win in an OpenIPO auction. But there are important differences. The entire auction is private, and winning bidders all pay the same price per share – the public offering price.

An OpenIPO auction is typically open for bids for 3–5 weeks prior to the effective date of the offering. Once the bidding concludes, the OpenIPO auction assembles the bids and, working from highest to lowest, finds the first bid price that will sell all the offering’s shares. This is the “clearing price” and will be the maximum price at which the issuing company will offer its shares.

The issuing company and the underwriters then decide the price at which the company will offer the shares, taking a number of economic and business factors into account in addition to the clearing price. The company may choose to sell shares at the clearing price, or it may offer the shares at a lower offering price.

If the number of shares bid for exceeds the number of shares in the offering, WR Hambrecht + Co allocates on a pro-rata basis. Under these circumstances, allocations will be rounded to multiples of 100 or 1,000 shares, depending on the size of the bid.

Several high profile companies have decided to use the OpenIPO auction process, including Google, Morningstar, Interactive Brokers, and Netsuite.

Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki