Jacqui Newman

There's quite a process behind this.

And the mechanism to price an IPO is a book build, which is basically like an auction.

And so what happens there is that

the investment banks and the issuer will work together to determine a price range.

And that will often be informed by feedback that they've got so far, looking at comparable companies, looking at, you know, what the market is doing at the moment.

And then they will get investors to bid across that price range.

So they will take bids at, you know,

throughout the price range and look to see where the demand sits across each of those various price points.

Yeah, so you can think of it somewhat as a stage process often.

So the first stage will be determining what is the appropriate price range to go out with.

Then what happens is that when the book build is actually run, institutional investors will bid at various points throughout the price range.

So they might say, I'll take $100 million at the low end of the price range and

At the high end of the price range, I'll take $50 million.

And so the investment bank is building a book of demand at those various price points.

At the end of the process, they'll have a book of demand, which is covered or not covered at various price points.

And they will determine this is where we should price the deal.

Ideally, they will price the deal at a level where you've got at least one times coverage and a bit more so that there is that sort of demand in the aftermarket.

Taking a step back though, institutional investors, how do they determine where they are going to bid, at what price they are going to bid?

So they meet with...

and go away and do often a lot of work in the background around building their own models, determining what is a fair price for this company.