What does "Devolvement" signifies and how does it pose risk to Investment Banks?



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What does "Devolvement" signifies and how does it pose risk to Investment Banks?

1 Answer(s)


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Devolvement signifies that investment bank has to buy the unsold securities in the event of under subscription. It poses risk to investment bank because bank has to buy more securities if there is more under subscription.
So in case of such risk, underwriter/bank will put more effort to aggressively sell the issue to reduce/avoid under subscription.