A method of implementing an offer for subscription or offer for sale. It is a compromise method of issue which draws on elements of a fixed price offer and a tender. Prior to the issue of shares, the issuing house conducts a bookbuilding exercise where it contacts investors and obtains commitments to purchase a number of shares at a specified price. Having established the demand for the shares over a two week period or so, the issuing manager sets the fixed price for the issue in line with the demand levels that have been established. Bookbuilding is a common method of implementing very large offers where the level of the issue price is difficult to determine in advance and where it is difficult to obtain underwriting (See underwriter) for the issue. Dresdner Kleinwort Wasserstein financial glossary
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FINANCE when financial advisers ask institutional investors how many shares they might buy and at what price before new shares are made available and sold:
• Bookbuilding will start today for the rail privatisation issue.
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bookbuilding UK US (also book building) /ˈbʊkˌbɪldɪŋ/ noun [U] FINANCE, STOCK MARKET
► a process in which financial advisers ask important investors how many shares they might buy and at what price in order to decide the price at which to sell the shares: »
After completing its book building exercise BSkyB said it would issue 19m new shares at £8.25 each.
Financial and business terms. 2012.