ASX BookBuild seeks to enhance current capital raising
techniques and the integrity of the secondary market by:
giving all ASX brokers access to ASX BookBuild via existing ASX
having a bookbuild price that is live and visible to the whole
determining allocation of stock by a prescribed set of rules;
facilitating strategic institutional stakes without compromising
ASX Bookbuild can be used by ASX listed companies for
placements, IPOs and renounceable rights offers of financial
products while also allowing retail investors to engage in capital
raisings and IPOs through their broker in much the same way as
What is a traditional bookbuild?
Under the traditional bookbuilding process, prior to finalising
the issue price in an IPO or secondary capital raising an issuer or
its investment bank 'built a book' by confidentially
accepting bids off-market from select investors. After the close of
the bookbuilding period, the bookrunner evaluated the collected
bids on the basis of certain evaluation criteria and together with
the issuer set the final issue price. Consequently, participation
in a traditional bookbuild is often limited to certain classes of
investors, and the allocation of shares between bidders is
determined by the issuer and the bookrunner in their absolute
discretion. The lack of transparency of this process often raised
many questions about pricing and security allocation and not least,
the effect of the process on good corporate governance.
How does ASX BookBuild operate?
Step 1: Company decides to do a capital raising
using ASX BookBuild. Appoints Technical Lead Manager
("TLM") to conduct the offer on ASX
BookBuild on behalf of the Issuer.
Step 2: Company and TLM set mandatory bookbuild
parameters including the opening price, the proposed raising
amount, the allocation to priority bidders and, if applicable, the
minimum close price.
Step 3: The TLM is permitted to submit initial
bids from cornerstone and other pre-identified investors who will
be guaranteed to receive 100% of their requested allocation
provided their bid price is at or above the final bookbuild price.
At this stage the ASX BookBuild will also open to the wider
Step 4: ASX brokers submit bids on behalf of
investors. While the bookbuild is open the TLM may amend certain
parameters including the pricing, and allocation parameters.
Step 5: In much the same way as a live share
price is displayed, ASX BookBuild determines the live bookbuild
price which is visible to the market at large.
Step 6: Company and TLM close the bookbuild
once satisfied with the final bookbuild price.
Step 7: Allocation of securities are made to
bidders whose bids are at or above the final bookbuild price
according to a defined set of rules that are applied in the same
way to every capital raising using ASX BookBuild i.e. classes of
bidders at or above the bookbuild price will be allocated a fixed
percentage of their requested allocation as set out in the deal
parameters set by the issuer and TLM.
Step 8: Securities allocated through ASX
BookBuild are electronically settled through CHESS &
notifications sent to custodians/registries.
Under ASX BookBuild, issuers can choose to conduct all or part
of the bookbuild for a capital raising in the open market. They
will be able to increase their reach to include a greater number of
investors as well as creating a process whereby allocations and
pricing can be set in the interest of shareholders and conducted in
a transparent process. However, whereas the new service may be
beneficial to some companies who can be more relaxed about the
make-up of their shareholder base, other listed companies may want
more control over who is purchasing their shares for strategic
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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