French auction

French auction

A French auction ("Offre à Prix Minimal", formerly "Mise en Vente") is a uniform-price auction used for pricing initial public offerings in France.

In this offering, the firm announces a minimum (reserve) price. Investors place sealed bids for quantity and price. When the bids are in, the firm negotiates a minimum and maximum price with the market regulator (the "Société des Bourses Françaises", or "SBF").

Any bid above the maximum price is eliminated as a virtual market order. The bidders who bid between the minimum and maximum price are awarded shares on a "pro rata" basis, each paying the minimum price.

In the event that demand for the stock is too high, the IPO may be changed to fixed-price offering.

ee also

* Book building

References

* Citation
last1 = McDonald | first1 = John G.
author1-link = John McDonald
last2 = Jacquillat | first2 = Bertrand C.
author2-link = Bertrand Jacquillat
title = Pricing of Initial Equity Issues: The French Sealed-Bid Auction
journal = Journal of Business
volume = 47
number = 6
pages = 37
year = 1974
* Citation
last1 = Derrien | first1 = Francois
author1-link = Francois Derrien
last2 = Womack | first2 = Kent L.
author2-link = Kent Womack
title = Auctions vs. Bookbuilding and the Control of Underpricing in Hot IPO Markets
journal = Review of Financial Studies
volume = 16
number = 1
pages = 31-61
year = 2003


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