Book Running Lead Manager: Meaning, Functions & Importance in IPOs

Learn what a Book Running Lead Manager is, what they do, and why they matter during an IPO—from setting price bands to ensuring smooth listing.

An IPO, or Initial Public Offering, is a key milestone in a company’s journey. Behind the scenes of every successful IPO is the Book Running Lead Manager (BRLM). These are SEBI-registered merchant bankers who oversee critical aspects of the IPO process. From regulatory documentation to investor engagement and price discovery, BRLMs play a crucial operational and strategic role.

The Book Running Lead Manager (BRLM) is the lead merchant banker appointed by a company to coordinate its IPO. The term “book running” refers to recording investor bids during the IPO’s book-building phase. Per SEBI regulations, companies must appoint one or more such professionals to manage public issues.

BRLMs act as intermediaries among the issuing company, SEBI, stock exchanges, depositories, and investors. When multiple BRLMs are appointed, the first-named entity often assumes the primary coordination responsibilities.

BRLMs manage the IPO end-to-end, ensuring compliance, efficiency, and transparency.

Book Building and Pricing

They guide the price discovery process through book building:

• Assess valuation and demand
  

• Recommend the price band
  

• Coordinate with institutional investors
  

Share Allocation

They supervise the share allotment process:

• Retail Individual Investors (RIIs)
  

• Qualified Institutional Buyers (QIBs)
  

• Non-Institutional Investors (NIIs)
  

• Coordinate with the registrar and stock exchanges for refund and allotment
  

Regulatory Oversight and Documentation

Responsibilities include:

• Preparing the Draft Red Herring Prospectus (DRHP)
  

• Addressing SEBI's observations
  

• Filing the Red Herring Prospectus (RHP)
  

• Ensuring all compliance measures are met
  

Marketing and Investor Roadshows

They handle non-promotional investor outreach:

• Present company fundamentals
  

• Conduct roadshows
  

• Collect feedback to refine pricing
  

Their value goes beyond coordination:

• Ensure regulatory compliance
  

• Facilitate accurate price discovery
  

• Enhance investor confidence
  

• Mitigate risks through due diligence
  

Co-Lead Managers

Assist BRLMs but do not lead filings or pricing.

Underwriters

Guarantee subscription; BRLMs focus on management and discovery.

Syndicate Members

Collect investor bids but do not influence pricing or filings.

Companies select BRLMs based on:

• Past IPO experience
  

• Market knowledge and investor access
  

• Brand credibility
  

• Fee structure
  

SEBI mandates BRLMs be registered merchant bankers.

Example: A mid-sized company aims to raise ₹500 Crores.

• Pre-IPO: BRLM files DRHP, completes due diligence
  

• Roadshow: Investor meets held; price band fixed at ₹95–100
  

• Launch: Bids collected over 3 days
  

• Allotment: Final price ₹100; shares allocated
  

• Listing: Shares listed; post-IPO support provided

• Book Building: Process to discover IPO price through investor bids
  

• Red Herring Prospectus (RHP): Document with IPO details minus price
  

• Allocation Categories:
  

  • RIIs: Up to ₹2 Lakhs
    

  • QIBs: Institutions
    

  • NIIs: Above ₹2 Lakhs
    

• Registrar: Manages applications and allotments
  

• SEBI: Regulates IPO processes

Refer the table below:-

• BRLMs do not assure listing gains
  

• More than one BRLM may be appointed
  

• BRLMs do not manage post-listing performance
  

• Share allocation is handled per SEBI norms
  

BRLMs play a key role in IPOs by managing pricing, compliance, and investor coordination. Their experience and diligence are essential to ensure that the public issue meets all regulatory standards and builds trust with the investor community.

This content is for informational purposes only and the same should not be construed as investment advice. Bajaj Finserv Direct Limited shall not be liable or responsible for any investment decision that you may take based on this content.