What exactly is book building and how does in operate in the IPO market?

SEBI Guidelines have defined Book Building as a process undertaken by which a demand for the securities proposed to be issued by a corporate body is elicited and built up and the price for such securities is assessed for the determination of the quantum of such securities to be issued by means of a notice, circular, advertisement, document or information memoranda or offer document. The name book building come from the building of the book and discovering the price. The price is discovered through an iterative process in which the price is discovered with the help of multiple retail and institutional bids.