Definition
Reverse Book Building
Reverse book building is the price-discovery process used in a voluntary delisting, where public shareholders bid the price at which they will tender shares.
In a delisting, instead of investors bidding to buy, public shareholders submit the prices at which they are willing to sell their shares back to the promoter. The discovered price is the one at which the acquirer reaches the required acceptance threshold, and the promoter can accept or reject it.
SEBI's Delisting Regulations govern the mechanism, including a floor price and minimum acceptance conditions, to balance fair value for minorities with feasibility for the acquirer. It is the mirror image of the book building used in an IPO.
Related terms
- DelistingDelisting is the removal of a company's shares from a stock exchange, after which they no longer trade publicly.
- Book BuildingBook building is the price-discovery process where an IPO's final price is set from the bids investors submit within a price band, rather than fixed in advance.
- Open Offer (Takeover)An open offer is a mandatory offer to buy shares from public shareholders when an acquirer crosses certain ownership thresholds in a listed company.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.