by Book Running Lead Manager (BRLM) is a key financial institution or entity responsible for managing and overseeing the entire process of a public offering, such as an Initial Public Offering (IPO) or Follow-on Public Offering (FPO). The BRLM is responsible for marketing the issue to potential investors, determining the offering price, and ensuring that the issue is successfully subscribed. They also manage the allocation of shares, liaise with regulatory authorities, and maintain the book of subscriptions.
Role of Book Running Lead Manager:
Book Running Lead Manager (BRLM) plays a pivotal role in the management and execution of public offerings, such as Initial Public Offerings (IPOs), Follow-on Public Offerings (FPOs), and other capital-raising activities in the securities market. The BRLM is primarily responsible for coordinating the entire process, ensuring smooth interaction between the issuer, investors, and regulatory bodies, and driving the success of the offering.
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Pre-Issue Activities
Before the public issue, the BRLM is responsible for conducting detailed due diligence on the issuing company. This involves evaluating the financial health, business operations, and legal status of the issuer to ensure that the offering is well-prepared and compliant with all regulatory requirements. The BRLM also helps the issuer in drafting the offer document (prospectus) and filing it with regulatory bodies such as the Securities and Exchange Board of India (SEBI) in India.
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Pricing and Valuation
One of the most crucial responsibilities of the BRLM is to determine the issue price or the price band for the securities being offered. This involves market research, financial analysis, and consultations with the issuer to assess the fair value of the company and decide on a price that will attract investors while maximizing the capital raised. The BRLM also decides the quantity of shares to be issued based on the demand and the desired capital to be raised.
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Marketing the Issue
The BRLM is responsible for marketing the public offering to institutional and retail investors. This includes conducting roadshows, investor meetings, and presentations to generate interest in the issue. The BRLM leverages its network and expertise to bring potential investors on board, ensuring the offering is subscribed adequately. The BRLM must have strong connections with institutional investors, analysts, and brokers, which helps in promoting the offering effectively.
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Book Building Process
In a book building issue, the BRLM oversees the entire process of collecting bids from investors, which helps in determining the final issue price based on demand. The BRLM ensures that the book-building process is transparent and efficient, ensuring that the subscription is adequate and that investors are allocated shares in accordance with the demand.
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Regulatory Compliance
The BRLM ensures that all necessary filings, approvals, and disclosures are made in accordance with the regulatory requirements, such as those set forth by SEBI or the stock exchanges. The BRLM acts as the intermediary between the issuer and regulatory authorities, ensuring that the offering process remains compliant with all laws.
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Post-Issue Activities
After the issue is successfully subscribed, the BRLM helps in the allotment of shares to the investors, ensuring a fair and transparent process. The BRLM also coordinates with the stock exchanges for the listing of the securities. Additionally, the BRLM may assist in post-listing activities, such as market-making or stabilizing the issue price, to ensure the smooth performance of the newly listed securities in the secondary market.
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Investor Relations
Throughout the entire process, the BRLM maintains communication with the investors, addressing any queries or concerns and ensuring that the issuer’s information is clearly communicated. This helps to build trust and credibility with the investors, leading to successful subscription and smooth operations post-offering.
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Risk Management
The BRLM is also responsible for assessing and mitigating the risks involved in the offering. This includes managing market risks, pricing risks, and any potential legal or operational risks that may arise during the issuance process. The BRLM’s extensive market knowledge and expertise play a vital role in safeguarding both the issuer and investors from risks.
