What is the subscription group?

The subscription groups are a collection of bankers who met for the explicit purpose of participating in the new edition of securities. In general, the subscription group is created under the leadership of the original investment bank or banker. All bankers who decide to participate in a group contract to buy a specified amount of shares and then sold them for a public bid price introduced by members of the group.

There are several advantages for the company that will organize a new offer through the patronage of the subscription group. One of the main advantages is the wide distribution network that the group can provide. Bankers who are part of the subscription group can first act as a purchase group and then as a sales group can provide a wider investor base before only one or two subscribers can handle. This means an improved opportunity for the initial public offer to generate much attention and result in quantal shares purchased by the subscriber.

For investment banks that decide to participate in this subscription company, there is also the possibility to combine their resources and ensure that the start of new security is profitable not only for the issuing corporation but also for subscribers. Based on their collective sources, bankers in the group can provide a higher visibility for a new offer and set a purchase price for an initial offer that will be in favor of all involved.

Under the terms of the agreement between the subscription group and the company, the number and price of the shares purchased by the group will be defined. At the same time, all participating parties agree on the initial price of the public. It is not uncommon for the timeline and a list of action items to be outlined in the thtaké agreement. This helps both the corporation and the members of the subscription group so that they know exactly what the actions each party will handle before, during and after starting.

Many subscription groups decideto work in a format known as a divided syndicate. In essence, this format helps to reduce the liability associated with the company to a number of resources provided by each group member. Members of the group who contribute with more resources will have more responsibility, but will also realize a higher rate of return on their efforts.