Module III· ECM — Follow-on, ABB, Rights IssueIntermediate
Question

How is the discount in a follow-on determined?

Answer

Discount depends on deal size relative to market cap / average daily volume, share price volatility, investor demand, urgency, seller overhang, use of proceeds, market backdrop, lock-up terms, and issuer quality. Larger, riskier, or more urgent deals need higher discounts. Strong demand and clear rationale reduce the discount.