What is IPO book building?

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IPO book building is an efficient price discovery mechanism wherein the price of the shares gets decided based on the demand for the shares at the end of the bidding process.

The issuer announces a price band (e.g. Rs 75 to Rs 80) for the issue. The investors place bids at different price levels within the price band. The demand for the IPO is known daily as the book gets built. The issuer company and the lead manager decide the cut-off price for the issue based on its demand.


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