a quick, risk-free way for a company to fill its coffers because the underwriting syndicate buys the issue and resells it to its clients
offering in which the lead underwriter buys all the shares from a company and becomes financially responsible for selling them.
A substantial secondary share sale where a bank or broker buys an institution's shareholding in another company – typically at a discount to the market price of around % to 5% - and then sells those shares down into the market. There are no fees in a bought deal, the party that buys the shares relying on the fact that it will be able to sell them at a price higher than the discount at which they were purchased.
An underwriter's commitment to buy all the shares from a company and becomes financially responsible for selling them. Also called firm commitment.
Term used when a deal maker provides all of the finance needed for a buy-out deal and then sells on or syndicates part of the funding to other investors at a later stage. Bought deals are often used by the larger providers of finance when speed or confidentiality are particularly important.
A firm commitment to purchase an entire issue from the issuing company.
Commitment from an underwriter or lead manager to purchase the whole issue of a security for resale to the secondary market. This method transfers the risk of being unable to sell a whole issue at the offering price from the issuer to the underwriter.
security issue where one or two underwriters buy the entire issue.
Acting alone, an underwriter that purchases all or most of a new issue from the issuer for subsequent resale. Underwriters risk their own capital in a bought deal.
A new issue of stocks or bonds bought from the issuer by an investment dealer, acting alone or with other dealers, for resale to clients. The dealer(s) risks its own capital in the deal in a bid to make higher profits.
An entire issue of new stocks or bonds bought from the issuer by an investment dealer, frequently acting alone, for resale to its clients. The dealer risks its own money in a bought deal, and in the event that the price has to be lowered to sell out the issue, the dealer absorbs the loss.
A means of issuing Eurobonds. The lead manager of the issuer buys the whole issue on predetermined terms and price and then places the bonds with its own clients. See also Fixed Price Re-offer.
A bought deal occurs when an underwriter, such as an investment bank or a syndicate, purchases securities from an issuer before selling them to the public. The investment bank (or underwriter) acts as principal rather than agent and thus actually "goes long" in the security. The bank negotiates a price with the issuer (usually at a discount to the current market price, if applicable).
