A group of investment banks that jointly underwrite the issuance of securities by a company. The syndicate pools the resources of its member banks, and hence would be able to spread the risk of the offering (public offering) among its members. In other words, the issuer can easily find buyers for its securities if the burden is spread out amongst all member banks involved. Amongst the members, a lead underwriter orchestrates the syndicate’s efforts in order to ensure marketing efforts’ success.
An underwriter syndicate is beneficial to issuers as it allows them to tap into a larger base of potential investors. With the issue divided up amongst all syndicate members, the issuer is more likely to market its securities to investors, even at times of unfavorable market conditions. Furthermore, the syndicate members can share the risk of an offering, so the risk is not concentrated in the lead underwriter.
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