Why gross spread matters to a first-time founder
For a founder considering a public or underwritten offering, this spread is a visible part of the financing cost. It compensates intermediaries for distribution, advice and risk, and it reduces the proceeds the issuer receives from each security sold.
Examples of gross spread
An issuer sells shares to an underwriting group for ₦9,300 each, and the public offering price is ₦10,000. The ₦700 difference is the gross spread before the underwriters allocate their own fees and selling concessions. Other offering costs remain separate.
Common misunderstanding
It is not the issuer’s profit, the investor’s return or necessarily the underwriter’s net profit. The underwriting group pays expenses and may share the spread among participants. Deal structure and terminology differ across markets and offering types.
When to use it
Use the term when comparing underwriting proposals or reconciling offering proceeds. Review the percentage and cash amount alongside legal, exchange, audit and advisory costs. Securities offerings are regulated, so founders should rely on authorised advisers in the relevant jurisdiction.