French auction
A French auction is a multiple-price auction used for pricing initial public offerings.
In this offering, the firm announces a minimum 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.
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.
