The Capital market represents the “Primary Market” and the “Secondary Market. The capital market has two interdependent and inseparable segments, the new issuers (the primary market) and stock (secondary) market. The primary market is used by issuers for raising fresh capital from the investors by making initial public offers or rights issues or offers for sale of equity or debt. An active secondary market promotes the growth of the primary market and capital formation, since the investors in the primary market are assured of a continuous market where they have an option to liquidate their investments.

A company can get money in the primary market by doing things like having its first sale to the public (Initial Public Offer or IPO), offering more rights to existing shareholders, or doing a private placement. An IPO is when a company sells its shares to the public for the first time. It's a big way for a company to get a lot of money, and this money doesn't have to be paid back quickly.

An IPO is like a big, important step for a business to grow. It helps a company get money from lots of people in the public market. Doing an IPO also makes a business look really good and famous. Sometimes, it's the only way for a business to get quick money to grow fast. When many companies do IPOs, it means the stock market and the economy are doing well. It's like a sign of a strong and healthy economy.

When a company does its first IPO and shares stuff with everyone, it's like they become friends with the people who give them money. The money goes to the company, and it's like the company's special treasure called "Share Capital." Those who shared their money, called shareholders, become the owners and get special powers. It's like the biggest way the company gets money to have cool things for its business, like things that stay with them for a really long time (we call it "Fixed Assets"). If the shareholders want, they can decide to sell their part of the company in the second market. It's like a big, friendly adventure!

What is Book Building?

SEBI, the rule-making buddy, says Book Building is like when a company wants to share cool stuff. They ask people if they want it and figure out the best price for these special things. They use notes, ads, and other things to decide how much of these special things they should share with everyone. It's like a fun way to decide the plan!

Book Building is like a game played during a big party called Initial Public Offer (IPO). In this game, everyone who wants to join can suggest how much they'd pay for the cool things the company is sharing. The company collects all these suggestions, and when the party ends, they decide the best price to offer these cool things to everyone. It's like a fun way to figure out the fair price!

What makes Book Building different from a Fixed Price Issue?

In Book Building, the prices for securities are either above or the same as the floor prices, but for a public issue, the prices are fixed. With Book Building, we can know the demand every day as the "book" is being made. But for a public issue, we only find out the demand when the issue is closed.