Definition of Book Building

Book building is a price discovery method in which the company issuing the shares doesn’t fix a specified price of the shares issued. Instead, it provides an indicative price range or a band. This means that the knowledge of the price of the issued shares is unknown in advance.

Points to remember:

• In a book building process, the demand of the shares is identified every day while the book is built.
• The book is filled with prices that investors indicate to pay per share.
• After the book is closed, the price is determined by a Book Running Lead Manager by analyzing the book’s values.
• This process is governed by SEBI’s ICDR regulations in India.