DivX IPO Feesposted by MR WAVETHEORY at 9/21/2006 11:26:00 PM
Offering Price: $16.00
Underwiters: JP Morgan, Bank of America Securities, Canaccord Adams
IPO Gross Spread: $1.12
Selling concession: 67.2 cents
Management Fee: 22.4 cents
Underwriting Fee: 22.4 cents
Reallowance: 10.0 cents
Deal Settlement: Wednesday September 27, 2006
For those who are unfamiliar, below is the definition of the gross spread from Wikipedia:
Gross spread refers to the fees that underwriters receive for arranging and underwriting an offering of debt or equity securities. The gross spread for an initial public offering (IPO) can be as high as 7%, while the gross spread on a debt offering can be as low as 0.05%.For example, if a company sells $100
million of shares in an IPO and the gross spread is 7%, the underwriting syndicate will receive fees of $7 million. These fees will be divided among the underwriters arranging the offering.
The standard contract is to divide the gross spread as follows: 20% management fee, 20% underwriting fee, and 60% selling concession. In the DivX deal, the underwriters made $10.192 million. The math is very simple.