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Inergy, L.P. Message Board

  • vickersviscount vickersviscount Aug 6, 2009 11:44 AM Flag

    Priced at 27.80

    it is my understanding that by the time an offering is priced, it is usually already placed. . .I don't think they would have too much trouble placing these shares considering NRGY's strong record (this ain't Citibank). . .as to why someone would buy an offering when they could buy on the open market. . .I really don't know the answer except to say if someone tried to buy 3.5 million shares on the open market, it would drive the price way up. . .also, perhaps those buying feel the price is fair. . .

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    • You've just about created the answer.

      Simply put, institutional investors promise to buy the shares ahead of time. The broker(s) have an overalotment of shares promised by the company in case they can sell more than originally thought. Even to themselves, for investment or future resale. If the shares go up in two or three weeks, say a couple of bucks, you'll have an account rep calling you with 500 shares for "no commission". They will really be making $2 or so per share. I've seen $5 per share totals split between broker and representative.

      Selling the (new) shares is the least expensive way to raise new money for whatever purposes. Usually the transaction results in accreations to earnings. Net results, win-win for a healthy company and their investors.

    • that's a good and fair answer ....