Impact of Lead Managers in IPOs

1. Who Are Lead Managers?

Lead Managers, also called Book Running Lead Managers (BRLMs) or lead underwriters, are SEBI-registered independent financial institutions (often investment banks or merchant bankers) appointed by companies to oversee and execute the entire IPO process.
Sources: [1][5][6]

2. Key Roles and Responsibilities

• Due Diligence and Eligibility: Lead managers conduct a thorough review of the company’s financials, business model, and regulatory compliance to ensure IPO eligibility.
  Source: [4][5]
• Drafting Offer Documents: They prepare crucial documents like the Draft Red Herring Prospectus (DRHP) and Red Herring Prospectus (RHP), ensuring all disclosures and compliance with SEBI and stock exchange norms.
  Source: [2][5][6]
• Structuring and Pricing: Lead managers help determine the IPO’s structure, issue size, and price band, and are deeply involved in the book-building process—collecting bids from investors to set the final offer price.
  Source: [1][8]
• Marketing and Promotion: They design and execute marketing strategies, organize roadshows, and present the IPO to institutional and retail investors to generate interest and demand.
  Source: [1][5][6]
• Regulatory Compliance: Ensuring all SEBI, ROC, and exchange regulations are followed throughout the IPO process.
  Source: [3][5]
• Appointing Intermediaries: Lead managers coordinate with registrars, bankers, and other intermediaries required for the IPO.
  Source: [5][6]
• Underwriting and Risk Management: They may underwrite (guarantee purchase of) unsold shares, reducing the risk for the issuing company.
  Source: [1][5]
• Allocation and Listing: After the IPO closes, lead managers manage share allotment, refunds, and ensure timely listing of shares on stock exchanges.
  Source: [3][6]
• Post-IPO Support: They provide ongoing advice and support to the company after listing and may help stabilize the share price in the initial days.
  Source: [1][3]

3. How Lead Managers Influence IPO Success

• Ensuring Compliance and Transparency: Their expertise ensures all legal and regulatory requirements are met, reducing the risk of post-listing issues.
  
• Optimizing Fundraising: By setting the right price and marketing the IPO effectively, they help maximize capital raised for the company.
  
• Boosting Investor Confidence: Reputed lead managers attract large institutional and retail investors, increasing subscription and credibility.
  
• Reducing Risks: By underwriting and managing market uncertainties, they protect both the issuer and investors.
  
• Efficient Process Management: Their coordination ensures smooth application processing, allotment, and refunds.
  

4. Pre-Issue and Post-Issue Functions

• Pre-Issue: Due diligence, document drafting, marketing, regulatory filings, appointing intermediaries, and pricing.
  Source: [3][5]
• Post-Issue: Managing escrow accounts, coordinating investor communication, allotment, refunds, listing, and share transfer to demat accounts.
  Source: [3][5][6]

5. Compensation and Selection

• Lead managers are paid a commission by the issuer, generally a percentage of the issue size.
  Source: [6]
• Companies may appoint multiple lead managers for large IPOs to ensure better reach and expertise.
  Source: [5][6]

6. Top Lead Managers in India (by IPO Count)

Lead Manager	IPO Count
ICICI Securities Limited	174
Axis Capital Limited	166
Kotak Mahindra Capital Company Limited	159
JM Financial Limited	124
Hem Securities Limited	122
Pantomath Capital Advisors Pvt Ltd	112
SBI Capital Markets Limited	107
IIFL Securities Ltd	95

7. Summary Table: Lead Manager’s Impact on IPO

Function	Impact
Due Diligence	Ensures company is IPO-ready and compliant
Document Preparation	Accurate, transparent disclosures boost trust
Pricing & Book Building	Optimizes capital raised, matches investor demand
Marketing	Generates investor interest, increases subscription
Underwriting	Reduces risk of undersubscription
Allotment & Listing	Ensures fair, timely process and smooth listing
Post-IPO Support	Advises company, helps manage price stability