Learn · Track 7: Research a company · lesson 3 of 3 · Intermediate
Book building on PSX: how the IPO strike price is set
A PSX IPO strike price comes from a Dutch auction between a floor price and a band 40% above it. How it works, with the Rs 33.00 SOYASUP result.
In a PSX book-building IPO (book building kya hai, strike price kaise banta hai), the company sets a floor price and a price band that ends no more than 40% above it. Institutions and large investors then bid inside that band. The exchange’s system ranks the bids from the highest price down and sets the strike price where the bids cover the whole book-building portion. That portion is at most 75% of the offer, and at least 25% goes to the public at the strike price. In the August 2026 IPO of Agro Processors & Atmospheric Gases (SOYASUP), the floor was Rs 32.00, the band ended at Rs 44.80, and the strike price was Rs 33.00.
This post explains the pricing step. For the full journey from draft prospectus to listing, read How PSX IPOs work.
What is book building?
Book building finds the price of new shares by asking buyers what they will pay, instead of the issuer fixing it in advance. The “book” is the list of all bids, each with a price and a number of shares.
The rules sit in the SECP’s Public Offering Regulations, 2017. This post uses the copy on the PSX website, updated to 15 September 2021, and PSX’s notice for the real IPO below. SECP has proposed further amendments since (a draft was issued in April 2025), so check the SECP website for the text in force today.
How is the floor price set?
The issuer decides the floor price and the price band, in consultation with its consultant. The regulations state that the upper limit of the band should not be more than 40% of the floor price. The prospectus must carry a separate Valuation Section that justifies the floor price. Once the Commission approves the prospectus, the floor price cannot be revised, except in the cases the regulations list.
So there are three numbers to read in any prospectus:
| Term | Meaning | SOYASUP example |
|---|---|---|
| Floor price | The lowest price at which a bid is accepted | Rs 32.00 |
| Price band | Floor price up to a ceiling no more than 40% above it | Rs 32.00 to Rs 44.80 |
| Strike price | The price set by the auction, paid by every successful bidder | Rs 33.00 |
A bid below the floor price, or above the top of the band, is not allowed.
How do the bids work?
Bidding runs on the PSX Book Building System. These are the rules from the regulations that affect the price:
- Who can bid. Eligible participants register with PSX and with the National Clearing Company (NCCPL), and pay margin money. The minimum size of a limit bid, or of each step in a step bid, is Rs 1 million.
- Margin. A book runner may accept institutional bids with a minimum of 25% margin money, and may waive the margin for institutions.
- Timing. Bidding runs from 9:00 a.m. to 5:00 p.m. on each day of the bidding period. A bidder can revise a bid upward until 5:00 p.m. on the last day.
- A live order book. The system shows demand at each price in descending order, with the cumulative shares bid, throughout the bidding period.
- A minimum number of bids. The process is cancelled if the total number of bids is below forty.
How is the strike price determined?
The regulations call the method the Dutch auction. All bids are arranged in descending order of price, and the cumulative number of shares is counted. The strike price is found by lowering the bid price until the total shares bid reach the number offered in the book-building portion.
The numbers below are invented to show the method. They are not from a real IPO. Say the floor price is Rs 30, the band ends at Rs 42, and 1,000 shares are offered.
| Bid price | Shares bid | Cumulative shares |
|---|---|---|
| Rs 42 | 300 | 300 |
| Rs 39 | 250 | 550 |
| Rs 36 | 200 | 750 |
| Rs 34 | 300 | 1,050 |
| Rs 31 | 400 | 1,450 |
The cumulative total first reaches 1,000 at Rs 34, so the strike price is Rs 34. The regulations then set the result:
- Bidders who bid above the strike price are allotted shares at the strike price. The three highest bidders (750 shares) pay Rs 34, not what they bid.
- The 250 remaining shares go to those who bid exactly Rs 34, in proportion to their bids. Their bids total 300, so each gets 250/300 of its request.
- Bidders below the strike price (the Rs 31 bid) get nothing, and the bank unblocks their money within one working day of the close of bidding.
How is the offer split between institutions and the public?
| Part of the offer | Share | Who | Price |
|---|---|---|---|
| Book-building portion | Maximum 75% of the offer size | Eligible institutions and large bidders | Strike price |
| Retail portion | Minimum 25% | General public | Strike price (an issuer may offer a discount to it) |
The regulations also state that the retail portion must be fully underwritten, unless bidders were allowed to bid for 100% of the offer. In that case, successful bidders agree to take any shares the public leaves unsubscribed. If the retail portion falls short, the unsold shares are taken up by the underwriters or are allotted to successful bidders at the strike price, pro rata.
A real case: SOYASUP in August and September 2026
Agro Processors & Atmospheric Gases Limited ran a book-building IPO in 2026. Every figure below comes from the PSX notice or the brokers’ letters filed with PSX, which the snapshot lists.
| Item | Figure | Source |
|---|---|---|
| Shares in the IPO | 58,049,541 ordinary shares | PSX notice N-1017, 19 Aug 2026 |
| Book-building portion | 43,537,156 shares (75%) | PSX notice N-1017 |
| Floor price and band | Rs 32.00; up to Rs 44.80 (40% above) | PSX notice N-1017 |
| Bidding dates | 27 and 28 August 2026 | PSX notice N-1017 |
| Strike price | Rs 33.00 | KTrade letter, 31 Aug 2026 |
| Bids against issue size | About Rs 2,563 million against Rs 1,393 million, 1.84 times | KTrade letter |
| Bidders | 189 took part, 149 were successful | KTrade letter |
| Public offer | 14,512,385 shares, applied for 3 and 4 September | KTrade letter, 7 Sep 2026 |
| Public applications | 7,876 applications for 26,625,000 shares, Rs 878.6 million | KTrade letter, 7 Sep |
| Listing | Trading began 15 September 2026 at an opening price of Rs 33 | PSX notice N-1125 |
The PSX notice words the book-building share as “seventy percent (75%)”. The share counts match 75%, since 43,537,156 is 75.0% of 58,049,541, and the public portion of 14,512,385 shares equals the remaining 25%.
Two things in the table show the rules at work. The strike price of Rs 33.00 is Rs 1.00, or 3.1%, above the floor and well inside the band that ended at Rs 44.80. The public paid Rs 33 as well: Rs 878,625,000 divided by 26,625,000 shares is Rs 33.00, so retail received no discount.
The KTrade letter also splits the 43,537,156 allocated shares by type of investor:
| Category | Shares allocated | Share of the portion |
|---|---|---|
| Individuals | 14,884,487 | 34.2% |
| Other institution or corporate | 9,561,458 | 22.0% |
| Development financial institutions | 8,175,000 | 18.8% |
| Insurance companies | 4,290,000 | 9.9% |
| Mutual funds | 3,376,188 | 7.8% |
| TREC holders (brokers) | 2,964,323 | 6.8% |
“Book building” is therefore not reserved for institutions alone. The letter shows individuals among the successful bidders, which fits the regulations’ Rs 1 million minimum bid.
For the public offer, the letter states that applications for up to 2,000 shares receive full allotment, and applications above 2,000 shares are allotted pro rata. Of the 7,876 applications, 711 were for more than 2,000 shares.
What does a strike price tell you?
A strike price tells you the price at which the bids cleared on that day. It does not tell you what the company is worth, and it does not set what the shares trade at afterwards.
SOYASUP’s own record shows this. In the SuperX snapshot, as of 9 October 2026, the first close after listing (15 September) was Rs 32.60, which is 1.2% below the strike price. The close on 9 October 2026 was Rs 28.25, which is 14.4% below it. These are two dated facts. They are not a verdict on the company or a forecast. The circuit breaker post explains the daily price limits that apply from the opening price.
The prospectus’s Valuation Section carries the issuer’s argument for the floor price. You need a CDC account to receive shares: see how to open a CDC account.
Frequently asked questions
What is the strike price in an IPO?
It is the single price, set by the Dutch auction at the end of book building, at which successful bidders are allotted shares. Every successful bidder pays it, even if they bid higher.
What is the difference between floor price and strike price?
The floor price is the minimum bid the issuer will accept, set before bidding. The strike price is the result of the bidding. In the SOYASUP IPO the floor was Rs 32.00 and the strike price was Rs 33.00.
How much of a PSX IPO is offered through book building?
The regulations allow a maximum of 75% of the offer size in the book-building portion. At least 25% goes to retail investors.
Can I bid in book building as a retail investor?
Eligible participants must register with PSX and NCCPL, and the minimum limit bid is Rs 1 million. Most retail investors apply in the public subscription at the strike price instead.
Try it
Follow each live IPO from draft prospectus to listing, with the PSX notices linked, on the SuperX IPOs page.
Education, not investment advice.
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