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WHAT IS BOOK BUILDING?

IT IS A PROCESS WHEREIN THE INVESTORS DETERMINE THE PRICE OF THE SHARES OPTION IS GIVEN TO INVESTORS TO SUBSCRIBE AT THE FLOOR PRICE OR ABOVE AT THEIR DISCRETION IT IS A PROCESS USED FOR MARKETING A PUBLIC OFFER OF EQUITY SHARES OF A COMPANY.

FEATURES OF BOOK BUILDING


THE ISSUER COMES OUT WITH AN ISSUE WITHOUT FINALISING THE ISSUE PRICE THE FLOOR PRICE AND THE CAP PRICE ARE ANNOUNCED JUST BEFORE THE OPENING OF THE ISSUE THE ISSUER HAS THE LIBERTY TO REVISE THE OFFER PRICE UPWARD OR DOWNWARD

FEATURES OF BOOK BUILDING


THE ALLOTMENT IS NORMALLY ON PROPORTIONATE BASIS TO THE RETAIL INVESTORS ABOUT 15% TO RETAIL INVESTORS 15% TO NON-INSTITUTIONAL BIDDERS and., 50% TO QUALIFIED INSTITUTIONAL BIDDERS

FEATURES OF BOOK BUILDING


RETAIL INDIVIDUAL BIDDERS COULD BID AT CUT OFF PRICE IF THE TOTAL VALUE OF SECURITIES APPLIED IS LESS THAN Rs.1,00,000/ RETAIL BIDDERS TO PAY THE BID MONEY ALONG WITH APPLICATION

TO REGISTER THE BID THROUGH AN ONLINE TERMINAL OF NSE OR BSE AT AN AUTHRISED BID CENTER

Fixed Price vs. Book Building

Fixed Price 1.

Book Building Demand can be known at the end of every day but price is known at the close of issue. Aggressive pricing (High Price) No pressure of unsatisfied demand in the market. It favours the issuers.

2. 3. 4.

The price is known in advance 1. to investor and the demand is known at close of the issue. Conservative pricing (Low 2. price) Generally oversubscribed 3. It favours the investors 4.

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