What is book building?

Book building is the process by which an underwriter attempts to determine the price at which an initial public offering (IPO) will be offered. The process of price discovery involves generating and recording investor demand for shares before arriving at an issue price.

What is book building in IPO?

Book building is utilized in Initial Public Offer (IPO) for effective price discovery. It is a mechanism where bids are collected from investors at prices above or equal to the floor price during the period the IPO is open. What are the characteristics of the reverse book-building process? Reverse book building is for effective price discovery.

What is a 100% book building?

100% Book Building: In this type, either 100% of the total profits from the book-building process are offered to the public or 75% of the net offer to the public is made through the Book Building process, and 25% of the net offer made to the public at the amount decided through the Book Building process.

What is reverse book building?

Reverse book building is used by an issuer to buy back shares. The underwriter solicits bids from existing shareholders and uses the order book to determine a final offering price for the shares. Book building is an integral part of the price discovery process for most initial public offerings. There are, however, other alternatives.