Investment banks can earn fees not just from advising on the timing, pricing and marketing of a new share issue but also from underwriting the whole thing.

When a firm first comes to market via an IPO for example there is always a chance that the investing public will not want to buy all the shares on offer at the offer price. In return for a fee an investment bank can offer to buy up any shares not taken up by other investors and thereby guarantee that the issuing firm raises a minimum amount of capital from the issue. It is quite possible for the same bank to both advise an issuer on the terms of the issue and also act as underwriter.

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