InvestorQ : What exactly is meant by hard underwriting and soft underwriting?
Dia Deshpande made post

What exactly is meant by hard underwriting and soft underwriting?

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swati Bakhda answered.
3 years ago
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Hard underwriting is when an underwriter agrees to buy his commitment of shares before the issue opens. The underwriter guarantees a fixed amount to the issuer. Thus, in case the shares are not subscribed by investors, the issue is devolved on underwriters and they have to bring in the amount by subscribing to the shares. The underwriter bears a risk which is much higher than soft underwriting. So what exactly is soft underwriting?

Soft underwriting is when an underwriter agrees to buy the shares at stage after the issue is closed. The risk faced by the underwriter as such is reduced to a small window of time. Also the decision making is much easier in the soft underwriting issue.

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