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Issue Management Services – Capital Raising Support

Introduction

When a company wants to raise ₹1000 Crore via IPO, it cannot do it alone. It needs a Merchant Banker.

1. Who is a Merchant Banker?

  • A financial institution (registered with SEBI) that manages the issue of securities.
  • Also called Lead Manager.
  • Examples: SBI Capital Markets, Kotak Investment Banking, JM Financial.

2. Functions (The IPO Journey)

A. Pre-Issue Activities

  1. Due Diligence: Checking if company claims are true.
  2. Drafting Prospectus (DRHP): Writing the offer document.
  3. Appointment: Appointing Registrars, Bankers, Ad agency.
  4. SEBI Approval: Getting the nod.

B. During Issue

  1. Underwriting: Agreeing to buy unsold shares.
  2. Marketing: Roadshows to attract investors.

C. Post-Issue Activities

  1. Allotment: Deciding who gets shares.
  2. Listing: Ensuring shares start trading on NSE/BSE.
graph TD A[1. Due Diligence] --> B[2. DRHP Filing with SEBI] B --> C[3. Roadshows / Marketing] C --> D[4. Issue Opens for Public] D --> E[5. Allotment of Shares] E --> F[6. Listing on Stock Exchange]

The IPO Process Flow

3. Categories of Merchant Bankers

  • Category I: Can act as Lead Manager (Everything).
  • Category II/III/IV: Restricted roles (Advisor, Underwriter).
  • (Nowadays mostly Cat I exists).

Summary

  • Pilot: Merchant Banker steers the IPO ship.
  • Regulator: SEBI.
  • Critical Role: Due Diligence & Pricing.

Quiz Time! 🎯

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