Merchant Bankers share

Having decided to go public, the company must now do a series of things to ensure a successful initial public offering. The first and foremost step would be to appoint a merchant banker. Merchant bankers are also called Book Running Lead Managers (BRLM)/Lead Manager (LM). The job of a merchant banker is to assist the company with various aspects of the IPO process including… • Conduct a due diligence on the company filing for an IPO, ensure their legal compliance and also issue a due diligence certificate • Should work closely with the company and prepare their listing documents including Draft Red Herring Prospectus (DRHP). We will discuss this in a bit more detail at a later stage • Underwrite shares – By underwriting shares, merchant bankers essentially agree to buy all or part of the IPO shares and resell the same to public • Help company arrive at the price band for the IPO. A price band is the lower and upper limit of the share price within which the company will go public. In case of our example, the price band will be Rs.1562/- and Rs.1875/- • Help the company with the road shows – This is like a promotional/marketing activity for the company’s IPO • Appointment of other intermediaries namely, registrars, bankers, advertising agencies etc. The Lead manager also makes various marketing strategies for the issue Once the company partners with the merchant banker, they will work towards taking the company public.

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