BRLM stands for Book Running Lead Manager. It is a financial institution or investment bank that manages the book-building process in an IPO or FPO. BRLMs are responsible for managing the issuance, handling regulatory requirements, marketing the offering, and ensuring the successful launch of the issue.
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What Is BRLM?
Book Running Lead Manager (BRLM) represents the primary investment banking entity managing the IPO process from initiation to completion. BRLMs handle crucial responsibilities including due diligence, documentation, regulatory compliance, marketing, and overall offering coordination.
These professionals oversee pricing strategies, investor relations, institutional marketing, subscription management, allocation process, and post-listing stabilization while ensuring regulatory compliance throughout the offering.
BRLMs coordinate with various stakeholders including company management, regulators, legal advisors, auditors, registrars, and other intermediaries while maintaining integrity and investor protection.
BRLM Example
Consider a major IPO where lead managers coordinate ₹1,000 crore offering, managing documentation, marketing, pricing, and allocation. They ensure systematic process execution while maintaining regulatory compliance and market stability.
Their responsibilities include conducting due diligence, preparing offer documents, organizing roadshows, managing institutional marketing, coordinating pricing committees, and overseeing allocation procedures.
Activities demonstrate comprehensive offering management, stakeholder coordination, risk assessment, market stabilization, and systematic execution following regulatory requirements.
Types Of Merchant Bankers
The main types of merchant bankers are Investment Banks, which help companies with mergers and acquisitions, Underwriters, who assist in raising capital through securities offerings, and Advisory Firms, which provide financial guidance and structuring for corporate deals and capital market transactions.
- Investment Banks: These merchant bankers assist companies in raising capital, advising on mergers, acquisitions, and corporate strategies, offering expertise in structuring financial deals, and facilitating capital market transactions.
- Underwriters: They help companies by guaranteeing the sale of new securities, assuming the risk of unsold shares, and assisting in pricing, marketing, and distributing securities during IPOs or follow-on public offers.
- Advisory Firms: These merchant bankers provide strategic financial advice on mergers, acquisitions, restructuring, and corporate governance, helping businesses with financial planning, risk management, and improving overall market positioning.
Role Of BRLM In IPO
The main role of a BRLM (Book Running Lead Manager) in an IPO is to manage the entire process, including pricing, marketing, underwriting, and ensuring compliance with regulatory requirements. They coordinate with the company, investors, and regulators to ensure a successful offering and capital raising.
- Pricing and Valuation: BRLM helps determine the optimal pricing for the IPO by analyzing market conditions, investor demand, and company valuation to set a fair price range for shares.
- Marketing and Roadshows: BRLM conducts roadshows to promote the IPO to potential investors, presenting the company’s financials, business model, and growth prospects to generate interest and attract bids.
- Underwriting and Risk Management: BRLM assists in underwriting the IPO, ensuring the offering is fully subscribed. They manage any risks associated with the IPO and may guarantee a minimum amount of capital raised.
- Regulatory Compliance: BRLM ensures the company complies with all legal and regulatory requirements, including filing necessary documents with SEBI, coordinating with auditors, and ensuring accurate disclosures in the prospectus.
- Investor Relations and Allocation: BRLM manages relationships with institutional investors and helps allocate shares to them, ensuring balanced participation. They also assist in determining the final share allotment based on demand.
- Post-IPO Support: After the IPO, BRLM may continue to offer support, including market stabilization, helping manage the stock’s performance, and ensuring smooth listing on the exchange.
Why Is Book Running Manager Important?
BRLMs play a crucial role in successful IPO execution through professional management of the entire offering process. Their expertise ensures proper documentation, pricing optimization, marketing effectiveness, and regulatory compliance.
They provide strategic guidance, market insights, institutional connections, distribution capabilities, and professional execution expertise necessary for successful public offerings.
Their importance extends to post-listing stabilization, market-making arrangements, stakeholder communication, and ongoing compliance management supporting long-term offering success.
Eligibility For Merchant Banker
Merchant bankers must meet SEBI’s comprehensive eligibility criteria including minimum net worth requirements, professional experience, infrastructure capabilities, and qualified personnel to obtain registration and operate.
Requirements include maintaining adequate capital, professional expertise, operational infrastructure, risk management systems, and compliance frameworks following regulatory guidelines.
Eligibility ensures proper market functioning through qualified intermediaries, maintaining professional standards, protecting investor interests, and ensuring systematic market development.
BRLM Advantages
The main advantages of BRLMs include their expertise in pricing and valuation, regulatory compliance, and marketing. They help ensure smooth IPO execution, attract investor interest, and manage risk, making the process efficient, transparent, and successful for the issuing company.
- Expertise in Pricing and Valuation: BRLMs use market insights to set a fair issue price, ensuring that the IPO is attractive to investors while helping the company raise the desired capital.
- Regulatory Compliance: BRLMs ensure that all documentation, filings, and disclosures meet the regulatory requirements set by SEBI, ensuring transparency and legal compliance during the IPO process.
- Marketing and Investor Relations: BRLMs create marketing strategies, roadshows, and presentations to generate investor interest, build brand credibility, and ensure the IPO receives wide attention, increasing the chances of a successful subscription.
- Risk Management: BRLMs assess market conditions and investor sentiment, helping the company mitigate risks by structuring the IPO offering and managing investor expectations, ensuring a smooth launch without significant market disruptions.
- Successful IPO Execution: BRLMs handle the entire IPO process from documentation to final allotment, making sure that all processes are streamlined, investors’ interests are managed, and the company achieves its capital-raising objectives effectively.
BRLM Disadvantages
The main disadvantages of BRLMs include high fees and commissions, which can be expensive for companies. Their involvement may also lead to conflicts of interest, and the IPO process can become overly complex due to their significant control and influence over the offering structure.
- High Fees and Commissions: BRLMs charge significant fees for their services, increasing the cost of the IPO process. These fees may be a burden, especially for smaller companies with limited budgets.
- Conflicts of Interest: BRLMs might prioritize their own financial interests over the company’s, leading to conflicts. This can impact pricing strategies, allocation, and the overall success of the IPO.
- Complex IPO Process: The involvement of BRLMs adds complexity to the IPO process. Their influence on the pricing and structure can make the process longer and more complicated, requiring extensive documentation and coordination.
Bookrunner vs Underwriter
The main difference between a bookrunner and an underwriter is that A bookrunner manages the entire process, including pricing and investor relations, while an underwriter guarantees the sale of shares and assumes the risk of unsold shares.
| Aspect | Bookrunner | Underwriter |
| Role | Manages the entire IPO process, including pricing, and investor relations. | Guarantees the sale of shares and assumes the risk of unsold shares. |
| Responsibilities | Oversees the offering, coordinates with investors, and determines pricing. | Buys and sells shares to institutional investors, ensuring the offering is fully subscribed. |
| Risk | Primarily focused on the pricing, investor demand, and distribution of shares. | Takes on the risk of not selling all shares at the offered price. |
| Focus Area | Ensures smooth book-building process, handles allocations, and market research. | Focuses on guaranteeing the success of the IPO by underwriting the shares. |
| Involvement | Works closely with other stakeholders like legal teams, auditors, and regulators. | May or may not be involved in the pricing process but guarantees share sales. |
| Investor Relations | Manages investor relations, coordinates with institutional buyers. | Involved in selling shares to institutional and retail investors but has no role in managing relations. |
List Of Book Running Lead Managers In India
The below table shows the List of Book Running Lead Managers In India
| Lead Manager | IPO |
| ICICI Securities Limited | 181 |
| Axis Capital Limited | 169 |
| Kotak Mahindra Capital Company Limited | 164 |
| Hem Securities Limited | 129 |
| Jm Financial Limited | 125 |
| SBI Capital Markets Limited | 112 |
| Pantomath Capital Advisors Pvt Ltd | 112 |
| Iifl Securities Ltd | 99 |
| Aryaman Financial Services Limited | 95 |
Book Running Lead Manager – Quick Summary
- BRLM (Book Running Lead Manager) is an investment bank or financial institution managing the IPO/FPO process. They handle regulatory requirements, marketing, and pricing, and ensure the successful execution of the offering.
- In a ₹1,000 crore IPO, BRLMs manage documentation, marketing, pricing, and allocation. They ensure compliance with regulations, manage risks, and coordinate stakeholders for successful execution and market stability, adhering to systematic processes.
- The main types of merchant bankers are Investment Banks, Underwriters, and Advisory Firms. Investment banks assist in mergers and acquisitions, underwriters help raise capital, and advisory firms provide financial guidance for corporate transactions.
- The main role of BRLM in an IPO is to oversee the entire process, including pricing, marketing, underwriting, and regulatory compliance. They collaborate with the company, investors, and regulators to ensure the success of the offering.
- The main importance of BRLMs lies in their expertise in managing the IPO process. They ensure proper documentation, pricing, marketing, and regulatory compliance. Their support extends to post-listing stabilization, ensuring long-term offering success.
- Merchant bankers must meet SEBI’s eligibility criteria, including net worth, infrastructure, professional experience, and qualified personnel. These requirements ensure that they operate within regulatory guidelines, protecting investor interests and maintaining market stability.
- The main advantages of BRLMs include their expertise in pricing, regulatory compliance, and marketing. They ensure a smooth IPO execution, attract investor interest, and manage risks, making the process efficient, transparent, and successful.
- The main disadvantages of BRLMs are their high fees and commissions, which can be costly for companies. They may also cause conflicts of interest, and their influence can complicate the IPO process.
- The main difference between a bookrunner and an underwriter is that a bookrunner manages the entire IPO process, including pricing, while an underwriter guarantees the sale of shares and assumes the risk of unsold shares.
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BRLM Full Form – FAQs
Book Running Lead Manager (BRLM) is the primary investment banking entity managing the IPO process from initiation to completion, handling documentation, due diligence, regulatory compliance, marketing, and overall offering coordination.
Yes, BRLMs must obtain SEBI registration as merchant bankers, maintain prescribed net worth, follow strict regulatory guidelines, and comply with continuous obligations ensuring professional market intermediation.
BRLM specifically manages the book building process and price discovery, while Lead Managers handle general IPO management. BRLMs have additional responsibilities in demand assessment and price determination.
While primarily associated with book-built offerings, BRLMs also manage fixed-price issues. Their role extends across various public offerings, including FPOs and rights issues, providing comprehensive offering management.
The company’s board appoints BRLMs based on expertise, market reputation, distribution capabilities, and past performance. Selection considers track record, institutional relationships, and execution capabilities.
Yes, larger IPOs often involve multiple BRLMs forming syndicates to manage offerings effectively. Each BRLM brings specific strengths, distribution networks, and institutional relationships enhancing offering success.
Lead Managers typically undertake underwriting responsibilities, but roles are distinct. Underwriting involves guaranteeing issue subscription, while lead management covers the entire offering process coordination.
Disclaimer: The above article is written for educational purposes and the companies’ data mentioned in the article may change with respect to time. The securities quoted are exemplary and are not recommendatory.
