Underwriting is the process by which investment bankers raise investment capital from investors on behalf of corporations that are issuing either equity or debt securities. An underwriter is a merchant bank or other entity that administers the public issuance and distribution of securities from a corporation or other issuing body.

  • This is a way of distributing a newly issued security, such as stocks or bonds, to investors
  • A syndicate of banks (the lead managers) underwrites the transaction, which means they have taken on the risk of distributing the securities