book building
bookbuilding, book building
The marketing of an issue of securities which effectively precedes the determination of the offer price. The bookbuilding period commences with the publication by the company of a preliminary offering document called the pathfinder prospectus or red herring. As a guide to potential investors the pathfinder prospectus normally contains an indicative price range within which the offer price will be set. On the basis of this document, the bank controlling the issue will receive firm indications from potential investors as to their level of demand at any given price so leading to the creation of a "book" of demand graded by price and quality. At the end of this period, the price is determined by reference to demand and the underwriting agreement entered into. The following day, the final prospectus is produced and dealings commence. Orders for the shares are confirmed with closing taking place a week or so later.
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Practical Law Dictionary. Glossary of UK, US and international legal terms. . 2010.

Look at other dictionaries:

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