What Is Devolvement?

When security or debt issuance is undersubscribed, an underwriting investment bank is forced to acquire unsold shares during the offering, which is known as devolvement. An investment bank will assist the issuing firms in raising money throughout the underwriting process. The bank may make a promise to the firm to sell all of the issue’s shares.
However, if investors do not acquire those securities, the underwriters may be held liable for the unsold shares. Devolvement can occur when a corporation issues or sells debt, as well as when a company sells an initial public offering (IPO).