Accelerated Bookbuild Details

The book-building process helps an investment bank determine the price of an initial public offering (IPO). Investors start the bid for the number of shares they would like to buy, along with the pricing of the shares. The issuing company hires such investment banks to act as underwriters to determine a suitable price range for their offering.

In an accelerated bookbuild, the entire process from hiring an underwriter to the issuance of the shares takes less than forty-eight hours. The issuing company contacts several potential investment agencies to act as underwriters. The implementation of the above process happens a day before the intended sale of shares.

The underwriter invites all potential investors and begins an auction-based procedure. Shares are issued to the investment group or individuals with the highest bid value. As per protocol, the underwriter then proceeds to publicize the details of the bid for the sake of transparency. The allocation of shares to the highest bidder is the final step in the book-building process.

Real-World Example of Accelerated Bookbuild

Singapore Sovereign Wealth Fund GIC Private Limited sold 2.4% of its shares in Swiss Bank UBS Group in under three hours through accelerated book building. The completion of the entire process, from setting up an underwriter to creating an auction bid with selected investors, took little to no time. The usual method of book building for the sale of shares would have taken days and weeks together.

UBS Group acted as the sole underwriter in the book-building process and only made investor calls to high-net-worth individuals and organizations. These investors were brought together based on their stock purchasing acumen. Through accelerated book building in the equity market, Singapore Sovereign Wealth Fund could generate quick funds, which would not have been possible through debt financing.

Significance of Accelerated Bookbuild

Accelerated book building allows issuing companies to acquire financing in a short period. A company trying to purchase another company follows the accelerated book-building process. The number of shares transferred through accelerated book building has significantly increased over the past few years due to its ability to raise capital quickly—the responsibility of acquiring investment institutions before the bidding process lies with the underwriter firm.

The bookbuild offering takes no more than forty-eight hours to finalize and complete, and an accelerated bookbuild involves little to no marketing. Organizations in immediate need of financing prefer accelerated book building to generate funds. Exposure of shares through the equity share market helps generate immediate financial backup.

Accelerated book building involves great risk for the issuing company, investors, and underwriters. Due to the fast pace of the entire procedure, highly qualified technical individuals with years of experience are involved. Experienced underwriters can correctly gauge accurate share pricing in a short time and must make this estimation in the best interests of both the issuing company and the investors.