ACCELERATED BOOKBUILD Meaning and
Definition
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An accelerated bookbuild is a method employed by companies or investment banks to quickly and efficiently raise capital by offering shares to institutional investors. It involves the process of soliciting bids from a selective group of institutional investors for the purchase of newly issued shares of stock in a short span of time.
Unlike traditional public offerings, where the company sets a fixed price and sells shares to the public over an extended timeframe, an accelerated bookbuild is a more expedited and flexible approach. The process begins by determining the specific number of shares to be issued and the minimum price at which the company is willing to sell them. The investment bank then contacts a limited number of institutional investors to gauge their level of interest and potential bid prices.
The bookbuilding process typically lasts for a few hours or days, during which interested investors submit their bids. The investment bank then reviews the bids and determines the price at which the shares will be sold. Once the bidding period ends, the investment bank finalizes the allocation of shares to successful bidders and announces the results to the market.
Accelerated bookbuilds are often used by companies that require immediate funding for specific purposes such as expansion, acquisitions, or debt reduction. This method allows companies to swiftly access capital markets, reducing the time and costs associated with traditional public offerings. Additionally, accelerated bookbuilds provide flexibility in pricing the shares, ensuring that the company can raise funds at the most favorable terms given current market conditions.
Etymology of ACCELERATED BOOKBUILD
The term "accelerated bookbuild" is a combination of two words: "accelerated" and "bookbuild". Here is the etymology of each word:
1. Accelerated:
The word "accelerated" originates from the Latin word "acceleratus", which is the past participle of the verb "accelerare". "Accelerare" is a combination of two Latin words, "ad" which means "towards" and "celer" which means "fast". The word "accelerate" came into the English language in the late 16th century and refers to the act of speeding up or increasing the rate of something, often in a literal or figurative sense.
2. Bookbuild:
The term "bookbuild" combines two words: "book" and "build".
