The Google IPO Auction: Bidding Strategies for Institutional Investors

06 May 2004
By Dr. Soren Tang Sorensen with former NERA Associate Director Dr. Philip Kalmus

The April 2004 Google initial public offering (IPO) filing with the US Securities and Exchange Commission caused a stir in the financial committee due to two aspects of the filing: (i) Google will have a dual share structure involving Class A and Class B shares and (ii) the IPO will be run as a sealed bid auction.

In this NERA brief, NERA Senior Consultant Dr. Soren Tang Sorensen and former NERA Associate Director Dr. Philip Kalmus illustrate the bidding strategy choices faced by institutional investors. The authors analyze the Google auction from the perspective of an institutional fund manager who is faced with the decision of how to bid in the Google auction process.