Role of lead managers in primary market activities
Table of Contents
Who can act as Lead Managers?
Category I Merchant bankers can only act as Lead Managers. SEBI has specified the maximum number of lead managers based on issue size. SEBI’s specifications are:
| Issue size (Rs. Crore) | Maximum number of Lead Managers |
|---|---|
| Upto Rs. 50 | 2 |
| 50-100 | 3 |
| 100-200 | 4 |
| 200-400 | 5 |
| Above 500 | Specified by SEBI on case to case basis |
Role of Lead Managers
The role of the lead manger starts with ascertaining the fund requirements of a client and continues till full subscription is received. If it is a book building process, the lead manager also helps determine the price band; in such cases, they are also called Book Running Lead Managers. Post issue activities, like intimation of allotments and refunds, are their responsibility as well.
The Lead Manager coordinates with the Registrar and ensures:
- Collection of applications from collecting branches.
- Processing of applications.
- Fixing the terms of allotment and finalization of allotment.
- Security of certificates dispatched.
- Refund orders are sent within time.
- Securities are listed.
Remuneration to lead managers
The remuneration to lead manager is in the form of commission. The ceiling on commission payable to lead managers is 0.5% upto Rs.25 crore of issue size and 0.2% in case the issue size is in excess of Rs.25 crore.
Who are Prominent Lead Managers in India?
Some of the prominent lead managers in India are:
- Enam Financial
- ICICI Securities
- IL&FS Investsmart
- SBI Capital
- Anand Rathi Securities
- Karvy Investor Services
- DSP Merrill Lynch
- JM Financial
- Centrum Capital
