There are primarily two types of IPO investment: Fixed price issue and book-building offering.
What is a fixed price issue?
In a Fixed Price Issue, the price of the shares is predetermined and disclosed in advance. Investors subscribe to the IPO at the fixed price set by the company, and the allotment is made based on this fixed price.
What is a book-building offering?
In a Book Building Offering, the price of the shares is not predetermined. Instead, investors bid for the shares within a price range specified by the company. The final issue price is determined based on the demand generated during the bidding process.
Fixed price issue vs. book-building offering
While both types of IPOs allow companies to raise capital from the public markets, they differ in terms of pricing mechanisms and investor participation. Fixed Price Issues offer certainty to investors, while Book Building Offerings provide flexibility and price discovery through the bidding process.
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What is Cut-off Price for a Book Issue Building?