How Securities are Issued?

Section: 3 Initial Public Offerings (IPOs)

Sub Section: 3 Book Building

Large investors communicate their interest in purchasing shares of the IPO to the underwriters prior to the issuance of the prospectus. These indications of interest are called a Book and the process of polling potential investors on their interest in the upcoming issue offering is called Book Building. These indications of interest provide valuable information to the issuing firm because institutional investors often will have useful insight about both the market demand for the security as well as the prospects of the firm and its competitors.

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