Underwriters of largest IPOs in the U.S. 2022
How big is Alibaba?
The Alibaba Group Holding, a hugely profitable Chinese company operating in the e-commerce sector, debuted on the New York Stock Exchange. This was a critical IPO because it gave private investors a chance to reach into the Chinese market. The company sells trillions of yuan in merchandise each year. For a company that was already handling volume on that magnitude at the time of its IPO, a skilled underwriter like Credit Suisse was crucial for and IPO.
Why does an IPO need an underwriter?
An IPO is a complicated process. Even a larger firm like Alibaba does not have specialists in the kind of regulations placed on the process, so they are willing to pay significant underwriter fees to ensure a successful IPO. This risk can pay off with high returns if conditions are correct, but a significant number of IPOs also have negative first day returns.