Who Are the Key Intermediaries Involved in an IPO

The Initial Public Offering (IPO) process involves several stakeholders who play critical roles in ensuring regulatory compliance, investor protection, and successful capital mobilisation. For retail investors, understanding these intermediaries provides clarity and helps build confidence in participating in IPOs. This article outlines the key intermediaries involved in an IPO and the responsibilities they hold throughout the issuance process.

When a private company decides to go public by offering its shares to investors, it must navigate a structured process regulated by SEBI. The smooth execution of an IPO requires coordinated efforts among various registered entities, collectively known as intermediaries.

The BRLM is typically an investment bank appointed to manage the IPO. It plays a central role in the process:

• Assists in drafting the Draft Red Herring Prospectus (DRHP)
  

• Works closely with the company to set the issue price and lot size
  

• Coordinates with other intermediaries for regulatory approvals and disclosures
  

• Markets the IPO to institutional and retail investors
  

Multiple BRLMs may be appointed, especially for large IPOs.

Registrars are SEBI-registered entities responsible for processing IPO applications and finalising allotment details. Their functions include:

• Collecting and verifying investor applications
  

• Coordinating with stock exchanges and banks for the ASBA process
  

• Managing the allotment process and preparing the basis of allotment
  

• Ensuring timely credit of shares to successful applicants
  

Well-known registrars in India include KFin Technologies and Link Intime.

Underwriters agree to purchase the unsold portion of an IPO, providing an assurance that the issuer will raise the intended capital. Though not always activated, underwriting serves as a confidence-boosting mechanism.

Their key functions are:

• Guaranteeing a minimum subscription level
  

• Pricing support, if required
  

• Taking on the risk of unsold shares
  

These are usually brokerages or banks that collect IPO applications from retail and institutional investors on behalf of the issuer. Their main roles are:

• Accepting bids during the IPO subscription period
  

• Facilitating the ASBA process
  

• Ensuring application data is correctly uploaded to the exchange platform
  

These are SEBI-authorised banks that help in managing the funds during an IPO. They perform the following roles:

• Accepting application money through ASBA
  

• Blocking funds in the applicant's account until allotment
  

• Refunding or releasing funds in case of non-allotment
  

While not involved in managing the IPO directly, exchanges are where the shares are eventually listed. Their responsibilities include:

• Providing the electronic bidding platform for IPO subscriptions
  

• Displaying real-time subscription data
  

• Facilitating the listing and trading of the shares after allotment
  

Depositories ensure that the allotted shares are credited securely to the investors’ demat accounts. Their core responsibilities are:

• Holding shares in dematerialised form
  

• Ensuring settlement and transfer of securities
  

• Providing account statements and transaction details to investors
  

While not a commercial intermediary, the Securities and Exchange Board of India (SEBI) is central to the IPO process. Its roles include:

• Reviewing the DRHP and giving observations
  

• Approving the final prospectus
  

• Laying down rules and guidelines for fair practices
  

• Monitoring the conduct of all intermediaries involved in an IPO
  

Each of these entities performs a specialised role that contributes to investor protection, transparency, and legal compliance. Investors are advised to understand the roles of these entities to better navigate the IPO process and ensure their funds and rights are protected.

The IPO process may seem complex at first glance, but the presence of multiple regulated intermediaries ensures that the journey from private to public listing is executed efficiently and fairly. Recognising the contribution of each intermediary not only builds investor confidence but also fosters informed participation in the stock market.

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.