Question

Answer the question.
What do you mean by 'Book Building'?

Answer 1

SEBI guidelines $2000$ define 'Book Building' to mean a process undertaken by which demand for the securities proposed to be issued by a body corporate is elicited and built up, and the price for such securities assessed, for the determination of the quantum of such securities to be issued by means of a notice, circular, advertisement, document or information memorandum or offer document. In other words, Book Building is a process by which shares are offered at a price which is based on the bids received by the company. Investors place their bids at different prices and ultimately that price and quantum which has maximum demand is selected.