In the process of launching an Initial Public Offering (IPO), the role of Book Running Lead Managers (BRLMs) is of central importance. These are basically merchant banks or investment banks registered with SEBI and appointed by companies to manage book-built IPOs.
They manage IPO book-building process, oversee issue process and ensure compliance with applicable regulations. They work in coordination with issuing company to determine IPO price band and final issue price based on market demand as well as investor bidding data.
Without a Book Running Lead Manager, a book-built IPO cannot possibly be completed as prescribed under SEBI regulations. In this blog post, we shall discuss Book Running Lead Manager in detail, including its key functions and importance in IPO process.
A Book Running Lead Manager (BRLM) is a SEBI-registered merchant banker or investment bank appointed by a company to manage and execute its book-built Initial Public Offering (IPO) lifecycle from the start of the process to the finish. They handle the legal, regulatory and marketing work needed for the listing of an IPO.
A company cannot directly prepare and file the Draft Red Herring Prospectus (DRHP) with SEBI on its own. BRLMs assist the company in preparing and filing DRHP with SEBI and handle various other regulatory and compliance requirements on the company’s behalf.
So, you can understand how important they are for a company looking to get listed. A company may appoint multiple Book Running Lead Managers for an IPO, depending on size as well as complexity of the issue.
Some popular entities that have acted as Book Running Lead Managers for IPOs in India include the following:
|
S. No. |
Book Running Lead Manager (BRLM) |
|
1. |
Axis Capital |
|
2. |
JM Financial |
|
3. |
ICICI Securities |
|
4. |
Kotak Mahindra Capital |
|
5. |
IIFL Capital Services |
|
6. |
SBI Capital Markets |
|
7. |
DAM Capital Advisors |
|
8. |
Goldman Sachs |
|
9. |
J.P. Morgan |
|
10. |
HDFC Bank (Investment Banking) |
Here are some of the main functions of the BRLMs:-
IPO Process Management:- The primary function of BRLMs is to oversee the entire IPO process, i.e., from the planning stage to the final listing stage.
Investor Communication:- They are often responsible for reaching out to a wide base of potential investors and sparking their interest so that they would want to invest in the IPO. For this, the BRLMs come up with marketing materials that point out the company's growth potential, financial health and competitive advantages.
Discovery of IPO Price:- Another key function of BRLMs is to determine the final issue price in consultation with issuing company by using the book-building method.
Regulatory Compliance for IPO listing:- While assisting companies with IPO process, BRLMs ensure that all regulatory requirements are followed, especially those set forth by SEBI.
Facilitation for Allocation of Shares:- The BRLMs also facilitate allocation of shares to the investors based on the demand received and final issue price.
BRLMs are vital to the IPO process for several reasons. Some of the most prominent reasons are as follows:-
Investor Relations:- BRLMs play an indispensable role in communication with institutional investors that are key to a successful IPO.
Market Confidence:- BRLMs build confidence among prospective investors. They do this by taking care of transparency, regulatory compliance and dissemination of right information.
Facilitation in Book-Building:- BRLMs facilitate book-building for effective price discovery that reflects market demand and thus balance the interest of the investor and the issuer.
Maximized Capital Raising:- The BRLMs have expertise in marketing and investor outreach. Because of this, they can help garner more bids and enable the companies to raise the desired capital.
The table below explains which companies benefit most from BRLM services and also gives examples of such companies.
|
Entities |
Examples |
|
Growing companies planning large IPOs (over Rs. 100 Crore) |
Nykaa, Paytm and Zomato appointed BRLMs to manage their IPOs. |
|
Startups that want to raise significant capital |
Delhivery took the help of BRLMs for the IPO and capital raising process. |
|
Companies in need of expertise in IPO pricing and valuation |
For help in determining appropriate IPO pricing and valuation, LIC relied on several BRLMs. |
|
Companies requiring support with regulatory compliance and IPO listings |
To fulfill SEBI requirements and manage the IPO listing process, Tata Technologies collaborated with BRLMs. |
|
Companies seeking strong investor reach |
To attract a broader range of institutional as well as retail investors, Hyundai Motors India Limited and the National Stock Exchange appointed various Book Running Lead Managers. |
For many companies, launching an IPO is a long-held dream. However, turning this dream into a successful public listing is not an easy task at all. It requires careful planning, compliance with all the regulatory requirements, and most importantly, strategic execution. From preparing required documentation and meeting all the SEBI requirements to determining the right pricing for IPO and investor outreach strategy, each and every stage demands close attention. Book Running Lead Managers play an important role in managing the IPO process effectively and bringing the necessary expertise to meet all requirements.
Want to launch an IPO for your company but unsure about legal, regulatory and procedural requirements involved? Our IPO consultants at Registrationwala can help you understand the entire IPO process easily and prepare a clear roadmap for your listing. We provide guidance on major requirements and assist you in connecting with SEBI-registered intermediaries while supporting you throughout IPO process.
Q1. What is BRLM full form?
A. BRLM full form is Book Running Lead Manager. It refers to a SEBI-registered merchant banker appointed by a company to manage and oversee its book-built IPO process.
Q2. Is BRLM mandatory for all IPOs in India?
A. No. BRLMs are required for book-built IPOs only. In a fixed-price issue, a Lead Manager gets appointed instead.
Q3. Can a company file DRHP directly with SEBI?
A. No. A company cannot directly file DRHP with SEBI. A SEBI-registered merchant banker acting as Lead Manager/BRLM prepares and then files the DRHP on company's behalf.
Q4. What is the difference between a Book Running Lead Manager and a Lead Manager?
A. A Book Running Lead Manager is specifically appointed for book-built IPO wherein investor bids are used for discovery of issue price. On the other hand, a Lead Manager is appointed for fixed-price IPO wherein issue price is determined upfront.
Q5. If I appoint a reputed BRLM for launching my company’s IPO, is my IPO guaranteed to be successful?
A. No. Appointing a reputed BRLM can help the company to manage its IPO process, meet all the regulatory requirements and reach out to investors. However, their appointment does not guarantee that company will have a successful IPO. Success totally depends on many factors like investor participation, IPO pricing, company valuation and market conditions.
Q6. Who can act as a Book Running Lead Manager in India?
A. In India, only an entity holding SEBI Merchant Banker Registration can act as a Book Running Lead Manager for an Initial Public Offering.
Q7. Can Investment Banks function as Book Running Lead Managers?
A. Yes, certainly. As long as the Investment Banks hold a valid SEBI Merchant Banker Registration, they can function as Book Running Lead Managers.
Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, finance and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.
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