What Does Underwritten Shares Mean?

Securities underwriting is the process by which investment banks raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt capital). ... This is a way of distributing a newly issued security, such as stocks or bonds, to investors.

What does it mean when shares are underwritten?

In the securities market, underwriting involves determining the risk and price of a particular security. It is a process seen most commonly during initial public offerings, wherein investment banks first buy or underwrite the securities of the issuing entity and then sell them in the market.

What is the need of underwriting of shares?

Underwriting ensures success of the proposed issue of shares since it provides an insurance against the risk. ... Underwriting enables a company to get the required minimum subscription. Even if the public fail to subscribe, the underwriters will fulfill their commitments.