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LogoutBook building is a method of effective price discovery used in initial public offerings . It is a process in which investors submit bids at various prices that are higher than or equal to the floor price during the IPO’s open period.
Book building is the process by which an underwriter attempts to determine at what price to offer an initial public offering (IPO) based on demand from institutional investors. An underwriter builds a book by accepting orders from fund managers, indicating the number of shares they desire and the price they are willing to pay.
It is an alternative method of making a public issue in which applications are accepted from large buyers such as financial institutions, corporations or high net-worth individual, almost on firm allotment basis, instead of asking them to apply in public offer.