[cjeane]

Privileges of running the IPO. The bank needs to leave upside room for its "best" customers. The company wants to be fully booked and raise as much as possible. It's a balancing act for both sides, with non perfect information.

[clairity]

the other thing to note is that a 10-20% pop is entirely due to that kind of institutional backscratching, rather than an indicator of underpricing.

if the principal underwriter can't put a syndicate together to pop the IPO that much, they're not worth their fees. it's a standard part of the game now.