Issue price
As Issue price (including issue price ), the first set by the issuer, off-exchange purchase price of new securities referred.
backgrounds
The issue price can be determined in three different ways:
Fixed price procedure
→ Main article: Fixed price method
With the fixed price procedure, the issue price and the issue volume are specified by the issuer. This process often leads to oversubscriptions or undersubscriptions for stock issues, since supply and demand cannot be balanced using the price mechanism. The issuer usually determines the issue price on the basis of fundamental company valuations and other key figures. A comparison of one's own company with comparable companies in the same branch ( benchmarking ) is often carried out. Changes to this valuation can no longer be taken into account from the date of determination until the date of issue, so that there may be a significant discrepancy between the issue price and the market price on the date of issue.
Auction process
In this process, the bidder transmits his price and quantity requests to the issuer. On the basis of all offers received up to a certain deadline, the issue is then allocated to the bidders with the highest bids. A distinction must still be made between the discriminatory tender process (American tender) and the competitive tender process (Dutch tender). While the bidders in the American tender receive the allocation at their individual price offers (different issue prices), in the Dutch tender a uniform "market clearing" price is set. As a rule, unrealistically high and low bids are not taken into account in both tender procedures in order to avoid distorting the average price.
Book building process
→ Main article: Bookbuilding process
The bookbuilding process, which is now mainly used in Germany for share issues, tries to strike a balance between the different interests of the issuer (the highest possible issue price) and the bidders (the lowest possible issue price). As in the auction process, the bidders submit their bids for the price and quantity of the desired issue volume to the issuer. The issuer can now make a qualitative as well as a quantitative classification. This is done by the fact that from a certain subscription volume the identity of the bidder must be disclosed. The issuer can therefore assign the subscription requests to the individual investors and thus select its future ownership structure in detail and determine the issue price depending on the demand for the individual quality categories.
Subscription gain / loss
The difference between the issue price and the initial listing is called the subscription gain or loss.
See also
Web links
- Determination of the issue price of shares (PDF file; 69 kB)