Fixed price issue vs book building issue in an IPO
Every IPO in India is either a fixed price issue or a book building issue. The difference is when the price is known and how demand is measured.
Fixed price issue
The company and its lead manager set one price before the issue opens, and every investor applies at that price. Demand is known only after the issue closes. In a fixed price issue at least half of the net offer is reserved for retail individual investors.
Many SME IPOs are fixed price issues.
Book building issue
The company announces a price band with a floor and a cap price. Investors bid for a number of shares at a price within the band, and the final issue price is set after the bidding from the demand at each price. Subscription figures are published category by category while the issue is open.
Retail investors can bid at the cut-off price, which means they accept whatever final price is set. Most mainboard IPOs use book building, with typical reservations of 35% retail, 15% non-institutional (HNI) and 50% QIB for companies that meet SEBI's profitability rules.
Side by side
Price: fixed in advance, versus a band with the final price set after bidding.
Demand: known at the end, versus visible every day through the subscription figures.
Retail share: at least 50% of the net offer, versus usually 35% for mainboard book-built issues.
Applying: the same in both, through your broker with UPI or net banking (ASBA).
What it means for you
In a book-built IPO you can watch the subscription by category before deciding how much to bid, and bid at the cut-off price to stay in the running whatever the final price. In a fixed price issue the price is certain from the start. Each IPO's page on IPO Khata shows its price or price band, lot size and the minimum and maximum bid for each category.
Related guides
- What is book building in an IPO?
- What the cut-off price means in an IPO
- How an IPO's price band is decided
More on how ipos work
- IPO lot size, price band and cut-off price explained
- SME IPO vs mainboard IPO: what is different
- IPO categories explained: retail, HNI (NII) and QIB
- Anchor investors in an IPO
- DRHP, RHP and prospectus: what to read before an IPO
- The shareholder quota in an IPO
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Information, not investment advice. GMP is an unofficial grey-market indicator; figures come from public sources (InvestorGain) and may be late or wrong. Not registered with or affiliated to SEBI, the exchanges, the registrars or InvestorGain.