What is a 'French Auction' Model and how it works - Indian IPO Blog

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Wednesday, February 3, 2010

What is a 'French Auction' Model and how it works

French Auction Model is an alternative book building model, whereby instead of fixing a specific Price Band for the IPO, a price known as "Floor Price" is initially fixed.

Institutional buyers are free to bid above the floor price so fixed and the allotment is done on a price-priority basis at differential prices. That is to say that in this type of model, different investors get shares at different prices. If two or more investors bid a certain quantity of shares at the same price then the allotment to these investors is done proportionately

Thus, in this model, for Retail Category and HNI Category, price for bidding would be the Floor price whereas for QIB category, price can be any price above floor price

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Neogen Chemicals IPO subscription status on Day 2

QIB: 0.95x HNI: 1.12x Retail: 3.14x Overall: 2.08 times