How does an investment banker decide how many shares to price in an IPO

Hello Sir,

I am Mallikarjun From Bangalore. I have a question regarding an IPO. That is

How does an investment Banker decide what number of shares to be authorized and issued ?

2 Answer(s)


Mallikarjun, Lets assume Pre-IPO a company has 10,00,000 shares outstanding and it is diluting 10% of equity in the IPO.
So the number of new shares issued will be the number of shares needed to make the new investors own 10% of the company. So 1,11,000 new shares will be issued in this IPO (since 1,11,000/11,11,000) = 10%


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