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Book Building
June 07 , 2012

Book building is a process by which the price at which shares are allotted in a public offer are decided. The company, assisted by bankers, values its shares and arrives at a price band. During the public offer, investors are allowed to bid for shares at a price in this band. After the bidding process is over, depending on how many shares were bid at what price, allotment price or 'cut-off price' is decided.

Those who bid below this price get no shares. Those who bid at or above this price get allotment at the allotment price. In case there are excess bids compared to shares on offer, a proportional allotment is done.

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