A book building process is nothing but the process to discover the price of shares. It helps in determining the price discovery during the process of an initial public offering or IPO.
It will only contain the floor price, which is the lowest price through which you can bid.
It will also contain a price band within which an investor can bid for the shares.
When bidding for shares the investor would indicate the size and the number of quantity that an investor would bid when applying for the shares. Once an investor bids for shares, there would be a cut-off price
What Is the Difference Between Book Building And A Normal Public Issue?
In the case of a book building offer as indicated above the price of the shares are not known. There would only be a price band. In fact, since the demand is being built everyday.
In the case of a public issue the demand is known at the end of the offer period and the price is also known in advance. This was a mechanism through which most of the shares on the Stock Exchanges have been listed over the last two decades.
In the case of a book building once the bidding process is complete the final price is arrived. The final prospectus along with the price is then filed with the Registrar of Companies.
When building in an IPO it is extremely important to also remember the timings. The timings are from 10 am to 5 pm.
The timings may be extended on the last day of the IPO if the book running lead manager makes a request for the purpose.
Make sure you are bidding within the correct price band.