0Book building is basically a process used in IPO for efficient price discovery, wherein during the period for which the IPO is open, bids are collected from investors at various prices, which are above or equal to the floor price. The offer price is determined after the bid closing date. In it’s strive to continuously improve Indian securities market; NSE offers its infrastructure for conducting online IPOs through book building. It helps to discover price as well as demand for a security to be issued through a process of bidding by investors. The advantages of this new system are:
a) The investor parts with money only after allotment,
b) It eliminates refunds except in case of direct applications and
c) It reduces the time taken for issue process. Though the guidelines for book building were issued in 1995, it is being used for IPOs from 1999.
Price Range :
As per the book building you will find :
1. Floor Price : The minimum price you can bid for share
2. Cap Price : The maximum price you can bid
