A type of initial public offering (IPO) in which investors (individual and institutional) bid by indicating the desired number of shares and the price they are prepared to pay. The price paid is the lowest bid that results in all the shares being sold. The offer price is set automatically based on the bids received rather than using a negotiated book-building process.

A prime example is Google’s IPO in 2004 where the company used the right to change the number of shares that would be issued and the percentage allocated to each bidder. Investors who bid $85 or more were allocated 74.2% of the shares they had bid for.