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What is “book-building”?
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- Preparing the income and expenditure ledgers of a company (book-keeping)
- Manipulating the profit and loss statements of a company
- A process of inviting subscriptions to a public offer of securities, essentially through a tendering process
- Publishers’ activity
Correct Option: C
Book building refers to the process of generating, capturing, and recording investor demand for shares during an IPO (or other securities during their issuance process) in order to support efficient price discovery. Usually, the issuer appoints a major investment bank to act as a major securities underwriter or bookrunner. The “book” is the offmarket collation of investor demand by the bookrunner and is confidential to the bookrunner, issuer, and underwriter. Book-building is a process of price discovery used in public offers. The issuer sets a base price and a band within which the investor is allowed to bid for shares.
