Henrik Wannberg; Martin Kvist; Mikael Gustavsson , pp. 79. Inst. för ekonomi och management/Dept. of Business Administration and Management, 2000.
Title: Pricing of IPO:s on the Swedish stock market
Authors: Mikael Gustavsson
Tutor: Anders Hederstierna
Problem: There are certain sets of problems for underwriters when they are pricing potential stock-exchange companies. The problem partly consists of estimating the demand at an IPO and also to accurately value the business in comparison to the market.
To set the price per share is problematic, since the company carrying out the public offering wants to optimise the amount of capital at the same time as they want the share to be subscribed in full. If the IPO would not be carried out, it could cause harm to the position of the underwriters.
Purpose: To investigate whether underpricing exists associated with IPO:s on the Swedish market during the period 1995-1999.
Method: The collection of data has been achieved by means of: Internet, E-mail and telephone calls.
Conclusions: We have reached the conclusion that oversubscribing in comparison to the return at an IPO has an average growth of 3.3 per cent the first day, on every occasion of oversubscribing.
For the studied population, including 138 initial public offerings, the average market value rise is 15 per cent the first day. When we made our calculations, adjustments have been made for the general index of Affärsvärlden (AFGX). The revenue of 15 per cent indicates that underpricing does exist.
102 IPO:s raise in value the first day and 36 decrease, after adjustmens have been made for AFGX. This interprets that IPO:s are underpriced.
Henrik tel. 073 - 62 63 554
Mikael tel. 0702 - 46 28 94