What is Book Building Process?

Book building is a process of capturing, generating, and recording the shares related demand of the investor and other securities during an initial public offering (IPO) or issuance process respectively to promote efficient discovery of share price.

In book building process, the price at which the securities will be allotted is unknown in advance to the buyers. The investors are aware of only the indicative price range. The demand for the shared allocated can only be determined as the book is built but the payment is done after the allocation only.