Reverse Book Building in SEBI Delisting: How It Works

Reverse book building is how the exit price gets set when a company's promoters take it private in a voluntary delisting. Instead of the acquirer naming a price and shareholders accepting or refusing, public shareholders bid the price at which they are willing to sell, and the price that clears the required threshold becomes the discovered price. It is the reverse of a normal book build, where investors bid to buy. In India the process sits inside the SEBI (Delisting of Equity Shares) Regulations, 2021.

How does reverse book building work?

The process runs in a defined order.

1. The acquirer announces the delisting and a floor price is determined under the regulations.
2. The bidding window opens. Public shareholders tender their shares with a price attached, at or above the floor price.
3. The discovered price is identified. It is the price at which the acquirer's shareholding plus the shares tendered reaches 90 percent of the total.
4. The acquirer decides. It may accept the discovered price, in which case all shares tendered at or below that price are bought at it, or reject it.
5. If 90 percent is not reached, the delisting fails and the company remains listed.

The mechanism gives public shareholders collective pricing power, because the acquirer cannot delist without their participation reaching the threshold. It also creates the well-known problem the 2024 amendment was aimed at: a small number of holders bidding at a very high price can push the discovered price well past any reasonable valuation.

What the 2024 amendment changed

SEBI approved amendments to the delisting regulations at its board meeting on 27 June 2024, and they reshaped the process in three ways that matter when reading a delisting announcement today.

A fixed price alternative. For companies whose shares are frequently traded, an acquirer can now use a fixed price route instead of reverse book building. The fixed price must be at least a 15 percent premium over the floor price. This route is available only where the initial public announcement was made on or after 25 September 2024.

A lower counteroffer threshold. In a reverse book building, the threshold for the acquirer to make a counteroffer was reduced from 90 percent to 75 percent of post-offer shareholding. An acquirer that has reached 75 percent but considers the discovered price excessive can now put a lower price to shareholders rather than abandoning the attempt.

Adjusted book value in the floor price. The amendment brought the concept of adjusted book value into the determination of the floor price, changing the base from which any premium is measured.

Reverse book building vs the fixed price route

What to watch in the filings

A delisting generates a dense sequence of exchange filings, and the sequence is the story:

• The initial public announcement, which fixes which regime applies, including whether the fixed price route is available at all.
• The floor price computation, now including adjusted book value.
• The bidding results, which show whether 90 percent was reached and at what price.
• The post-offer shareholding pattern, which is where the outcome becomes visible in the ownership record. See how to read a shareholding pattern.

Delisting also interacts with the takeover rules, since an acquirer building toward control files under SAST along the way. See what is a delisting offer, delisting vs buyback and what is a SAST open offer for the neighbouring mechanisms.

Flock reports these disclosures as the exchanges publish them, dated and linked back to source. Whether to tender, and at what price, is a decision this page does not make for you.