Accelerated Bookbuild (Finance) Definition
An accelerated bookbuild is a method whereby the offering of new shares in the equity or capital market is done within a short period. The bookbuild of the offering is completed quickly, often within 48 hours or less. This method provides an offer to a company or an investor to purchase stocks in the equity market in a short period of time. Companies use the accelerated bookbuild method when they want to acquire another firm or when they are in dire need of financing. Little or no marketing is done when using accelerated bookbuild.
A Little More on What is Accelerated Bookbuild
Book building is a process in the equity market whereby buyers (investors) make demand for shares and other security products during an initial public offering (IPO). For an IPO to take place, an underwriter must be present, this could be a professional investment manager, an accountant or an investment bank.
An accelerated bookbuild however is that in which the offering of shares or stocks is done within a short period of time. Companies that are in dire need of financing and do not want to opt for debt financing use the accelerated bookbuild method. This method is an alternative route of obtaining quick financing within a little time.
Oftentimes, accelerated bookbuild transactions are done overnight. The bookbuild process takes one or two days. An accelerated bookbuild serves as an opportunity for companies that wants to urgently obtain financing in the equity or capital market. Companies offer shares or stocks in a short period using the accelerated bookbuild.
Investment banks and financial institutions who can serve as underwriters in the IPO are called by a firm who wants to make the offering. It is often done as an auction-like transaction, the highest bidder takes the offering. This type of offers are made to qualified investors, usually high net worth firms or investors.
References for Accelerated Book Build
Academic Research on Accelerated Book Build
The rise of accelerated seasoned equity underwritings, Bortolotti, B., Megginson, W., & Smart, S. B. (2008). Journal of Applied Corporate Finance, 20(3), 35-57.
Privatization Policy and the Greek Economy, Papazoglou, L. (2007). About Brand Greece, Special Privatization Secretary.
Do financial firms exhibit any special acumen?: evidence from accelerated seasonsed equity offerings, Xu, S. (2013). HKU Theses Online (HKUTO).
Characteristics of Norwegian Rights Issues, Krakstad, S., & Molnár, P. (2015).
Are the discounts in UK open offers and placings due to inelastic demand?, Armitage, S., Dionysiou, D., & Gonzalez, A. (2012).
The Rise of Accelerated Seasoned Equity Underwritings, Megginson, W. L., Bortolotti, B., & Smart, S. B. (2007).
NEw Equity raisiNg MEthoDs for listED coMPaNiEs: JuMbos aND raPiDs—oPtiMisED rights offErs aND PlacEMENts, Philips, J. D., & Mathewson, V. E. (2006). The APPEA Journal, 46(1), 475-480.
A quantitative analysis of rights offerings on the Swedish market, Hammar, D., & Perman, O. (2015).
Who’s doing what…, Aitken, V. (2017). Without Prejudice, 17(11), 72-72.
Revealed: the top legal networks for finance, Savage, N. (2006). Int’l Fin. L. Rev., 25, 19.
Re‐equitizing Corporate Balance Sheets: Choosing Among the Alternatives, Draho, J. (2008). Journal of Applied Corporate Finance, 20(3), 58-67.