1. Book
Building
Prepared by:-
Yashika Vashistha
Under Guidance:-
Mukta Rohatgi

3. The process by which an underwriter
attempts to determine at what price to
offer an IPO based on demand from
institutional investors.

4. ISSUE PRICE
IS DETERMINED AFTER
After Bid is

5. PROCESS

6. Appoint Merchant
Company Issue a Draft Prospectus
Banker as Book Runner
Book Runner appoint Draft Prospectus Filled
Price Discovery begin
syndicate member and with Concerned
through Bidding Process
register Intermediate authority (SEBI)
At close of Bidding,
book runner and
company decide
allocation and
allotment.

7. How do
Investor
Bid??

8. The Issuer set a
Base Price Band
(floor price)
Within which the investor is allowed
to bid for shares

9. Raises89 crore
With Price band
between
70 and 75

10. Suppose
Company XYZ wants to issue 100 shares through book building. They demand
is as follows.
Subscribed Price
(No. of shares) (Rs)
50 100
65 90
80 80
95 70
105 60
The issue price will be that level at which all the shares get subscribed. So, the
shares are being subscribed to between Rs 60 & Rs 70.

11. Type Of Book
Building
100% of the 75% of the
Net Offer to Net Offer to
the Public the Public

12. 100% Net Offer TOTAL PUBLIC ISSUE
(i.e.net offer to the public)
To Public
Allocation to retail individual Allocation to Allocation to
investors (who participated in non-institutional qualified institutional
the bidding process) who investors who buyers
applies participated in who participated
or bids for securities of or for a the bidding in the bidding
value of not more than process. process.
Rs.50,000/-.
Not less than 25% of Not less than 25% Not less than 50% of
the net offer to the of the net offer to the net offer to the
public shall be available the public shall be public shall be
for allocation available for available for allocation
allocation

13. 75% Net Offer
To Public
TOTAL PUBLIC ISSUE
(i.e.net offer to the public)
BOOK FIXED
BUILDING PRICE
METHOD METHOD

14. BOOK BUILDING
METHOD
75% of the public issue
can be offered to
institutional investors as well as non institutional
investors who had participated
in the bidding process
Not less than 25% of the net
offer to the public shall be available for allocation to
Non-Qualified Institutional Buyers.

15. FIXED PRICE
METHOD
25% of the net offer to the public can be offered
at the price determined through book building, shall be
reserved for allocation to retail individual investors
who had not participated in the bidding process.
Not more than 50% of the
net offer to the public shall
be available to Qualified
Institutional Buyers.

17. The option of Book Building shall be available to all corporate which are
otherwise eligible to make an issue of capital to public.
In case of 100% & 75% book building option , the portions shall be separately
identified as placement and net offer to public.
Securities offered to the public are separately identified as net offer to public.

18. Underwriting shall be mandatory to the extent of net offer to the public, by
the syndicate member or the book runners.
The lead merchant banker shall prepare and file the offer document with the
SEBI . The offer document will include total size and price band within which
securities are being offered for subscription.
The bid will be accepted for a minimum period of 5 days.

19. Issue of capital shall be Rs.25 crores and above.
In case of an under subscription in an issue, the shortfall shall have to be made
good by the Book Runner's to the issue.
Trading shall commence within 6 days of close of the issue, otherwise interest
@15% shall be paid to investor.

20. TIME FRAME
FOR ISSUE OF
SECURITIES

21. LET, T = CLOSE DAY OF THE OFFER
T+1 DAYS = PRICE DETERMINATION
T+2 DAYS = ALLOCATION LIST IS FINALISED
T+3 DAYS = ALLOCATION LIST ELECTRONICALLY SENT TO THE
COMPANY

22. T+4 DAYS = BANKERS TO CONFIRM CLEARANCE OF FUNDS,
STOCK EXCHANGE TO ISSUE TRADING PERMISSION.
T+5 DAYS= NSDL/CDL TO CREDIT THE INVESTORS ACCOUNT
WITH THE NUMBER OF SHARE ALLOTED.
T+6 DAYS =TRADING TO BEGIN AT THE STOCK EXCHANGE`

24.  Investor can not bid below floor price.
 Book building Process some times leads to underpriced or
overprice of securities.
 Book Building Eliminate unreasonable issue price by Promoters.
 The Book Runner Lead Manager (i.e. merchant banker) and the
syndicate members who are the intermediaries are both eligible
to act as underwriters.
 Book Building help investor to fair play in the market.