Categories: IPO

Open Bookbuilding and Closed Bookbuilding

In the book-building process of an IPO, the price of shares is determined through a bidding process as per the demand for shares under each investor category. In an open book-building process, merchant bankers and underwriters along with the issuer will display the demand for securities on a public platform, such as, website of stock exchanges. This helps investors to know the demand for the company’s stocks in real-time and thereby place their bids within the price band accordingly.

In a closed book-building process, the book and thereby the information related to the demand for the shares is not made public. Interested bidders have to thereby take a call without any information around bids submitted by other bidders.

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