The IPO process involves several entities, such as the issuing company, institutional investors, brokers, lawyers, regulators, retail investors, and an intermediary company.

Consider the following IPO deal:

On August $10,2012,$ Manchester United PLC $($MANU$),$ a professional soccer team in the English Premier League, went public with the sale of $16,666,667$ shares of Class A ordinary common shares for $$14$ per share. The sale, which raised $$233,333,338,$ was led by the Jeffries Group, Inc. and conducted with assistance from Credit Suisse Group AG and JP Morgan. All three institutions served as bookrunners for the offering. A variety of other banks across the world participated in the sale by offering shares to their customers.

Shares sold in the IPO were both newly created shares as well as those provided by the Malcolm Glazer family, the owners of MANU prior to the offering.

$1.$Which firm is the lead underwriter of the MANU IPO?

The Glazer family

Credit Suisse Group AG

$2.$ The underwriter in the IPO process has several responsibilities.

True or False: Underwriters sell IPO shares only to their institutional clients.

False

True

Assume that a stock$-$issuing firm has a choice between a private placement selling the shares for $$36\mathrm{.}00$ per share or a best efforts offering that will sell all available shares at the prices described in the following probability distribution:

Best efforts expected probability distribution

Probability

Selling price

Lowest quoted price $20\%$ $$32\mathrm{.}00$

Mid$-$range price $30\%$ $$36\mathrm{.}00$

Highest quoted price $50\%$ $$42\mathrm{.}00$

$3.$ Assuming that the issue is fully subscribed, or sold, which method would generate the most capital for the issuing firm?

Best efforts sale

Private placement

$4.$ A relatively new IPO selling method has developed: the unsyndicated stock offering. Under this arrangement,

the issue is sold to institutional investors by an underwriting syndicate.

$100\%$ of the issue is sold to individual investors by a single underwriter.

the entire issue is sold to both individual and institutional investors by an underwriting syndicate.

$100\%$ of the issue is sold to institutional investors by a single underwriter.