Bids and Allocations in European IPO Bookbuilding

Tim Jenkinson and Howard Jones

No 3644, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This Paper uses evidence from a dataset of 27 European IPOs to analyse how investors bid and the factors that influence their allocations. We have the complete books for these deals ? amounting to 5540 bids ? and so can analyse directly how bids and allocations are related. All these deals are private sector IPOs where the bookrunner was a leading European investment bank. We make use of a unique ranking of investor quality, associated with the likelihood of flipping the IPO, as produced by a group of US and European investment banks. We find that 'high quality' investors are consistently favoured in allocation and in out-turn profits. We also find that bids submitted via the bookrunner and large bids received better pro-rata allocations and higher average profits. We find that a very small proportion of all bids submitted during the bookbuilding contain price limits ? especially in hot IPOs ? and, in contrast to Cornelli and Goldreich (2001), we do not find that that such bids are favoured in terms of allocation.

Keywords: Ipo; Bookbuilding (search for similar items in EconPapers)
JEL-codes: G14 G24 (search for similar items in EconPapers)
Date: 2002-11
New Economics Papers: this item is included in nep-cfn, nep-eec and nep-fmk
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (31)

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