A company plans to offer its stock to the public in order to raise funds, and this process is known as the book building process. For effective price discovery, an IPO (initial public offering) or FPO (follow-on public offering) will use this process. It is a mechanism that collects and compiles bids from investors at various prices that are higher or equal to the floor price during the IPO's open period (lowest price at which bids can be made).
Following the bid closing date, the offer price is determined. Once the price of the stock has been determined, the issuing company can decide how to divide its stock among bidders.

The book building process is a mechanism used during initial public offerings (IPOs) to determine the price at which shares will be offered. It involves the underwriter inviting institutional investors to submit bids for the number of shares they want to purchase and the price they are willing to pay. This process helps gauge market demand and set a realistic price range. Investors place their bids within this range, and based on the responses, the final offer price is decided. The method ensures efficient price discovery by reflecting genuine market interest. Book building also provides transparency and helps in achieving a fair valuation for the issuing company, balancing the interests of both the issuer and the investors.