Book running lead manager (BRLM) in Indian IPOs
A book running lead manager (BRLM), also referred to as a lead manager or book runner, is a SEBI-registered merchant banker appointed by an issuer to manage the preparation, filing, marketing, and execution of a book-built public offer of securities in India. The BRLM is the central co-ordinating intermediary in an Initial Public Offering (IPO): it prepares the Draft Red Herring Prospectus (DRHP) and the Red Herring Prospectus (RHP), interfaces with SEBI during the regulatory review, manages the investor roadshow, co-ordinates with the registrar, the exchanges, and the sponsor banks, recommends the final issue price to the issuer’s board after the book-building process concludes, and files the final prospectus. Larger issues commonly appoint multiple BRLMs, in which case one or more are designated as “global co-ordinators” or “book running lead managers” and the others as “co-book running lead managers” or “co-managers”, with their respective responsibilities delineated in the inter-se allocation agreement.
The BRLM’s statutory standing derives from the Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992, which require all BRLMs to hold a Category I Merchant Banker registration from SEBI and to maintain a minimum net worth of ₹5 crore. The ICDR Regulations additionally require the BRLM to file a due diligence certificate with SEBI at the time of DRHP filing, certifying that the DRHP is complete, factually accurate, and compliant with all applicable disclosure standards.
Regulatory basis
SEBI (Merchant Bankers) Regulations, 1992
The 1992 Merchant Bankers Regulations constitute the primary licensing regime for BRLMs. A Category I merchant banker may undertake the full range of merchant banking activities including management of public issues, underwriting, portfolio advisory, and corporate advisory. Category II and III merchant bankers have progressively restricted scopes of activity and cannot serve as BRLMs for public issues. Merchant banker registrations are renewed every three years; SEBI may cancel or suspend a registration for violations of the regulations or the SEBI Act.
SEBI (ICDR) Regulations, 2018
Schedule V of the SEBI ICDR Regulations specifies the contents of the due diligence certificate that the BRLM must file. The certificate requires the BRLM to affirm that it has conducted independent verification of all material statements in the DRHP, that there are no material omissions, that the issuer meets the ICDR eligibility criteria, and that the BRLM has no conflict of interest with the issuer that has not been disclosed.
Regulation 34 of the ICDR requires the BRLM to submit its inter-se allocation agreement to the stock exchanges, making public which BRLM is responsible for which categories of investor in a multi-BRLM structure. This allocation governs the channel through which QIBs, NIIs, and retail investors route their bids and is the basis on which BRLM fees are allocated post-issue.
SEBI’s BRLM liability framework
A BRLM is jointly and severally liable with the issuer for any material misstatement or omission in the offer document. The Companies Act, 2013 (Sections 34, 35, and 36) imposes both civil liability (for compensation to subscribers who relied on a false prospectus) and criminal liability (imprisonment and fine) for knowingly false statements in a prospectus. The BRLM is a signatory to the prospectus and therefore within the ambit of these provisions. In SEBI enforcement practice, BRLMs have been censured, warned, and fined for inadequate due diligence in cases where material information about an issuer was not disclosed.
Duties and responsibilities
Pre-filing: due diligence and DRHP preparation
The BRLM’s primary obligation before filing is to conduct a thorough due diligence on the issuer. This involves:
- Review of audited and unaudited financial statements for materiality and compliance with Ind AS.
- Legal due diligence on material contracts, litigation, regulatory approvals, and intellectual property.
- Management interviews and verification of representations.
- Industry and market analysis (the BRLM typically commissions an independent industry report from a research firm, which is incorporated into the DRHP).
- Assessment of the objects of the issue and the reasonableness of projections (BRLMs may not certify projections under SEBI rules, but they assess the plausibility of the stated objects).
After due diligence, the BRLM drafts the DRHP in compliance with Schedule VI of the ICDR. The draft is circulated for comment to the issuer’s management, legal counsels, auditors, and industry report authors before filing.
Filing: SEBI interface
The BRLM files the DRHP with SEBI and the concerned exchanges. During the SEBI observation window (thirty working days for standard track), the BRLM corresponds with SEBI on behalf of the issuer, answering queries, providing additional information, and negotiating modifications to the offering structure if required by SEBI observations. The observation letter is addressed to the BRLM.
Pre-subscription: roadshow
After the SEBI observation letter is received and the DRHP is converted to the RHP, the BRLM organises the investor roadshow. The roadshow consists of a series of presentations to institutional investors (QIBs, foreign portfolio investors, insurance companies, and mutual funds) in Indian cities and, for larger issues, in global financial centres. The roadshow is the principal channel through which institutional investors gather information to inform their book-building bids. Feedback from the roadshow informs the BRLM’s recommendation to the issuer on where to set the price band.
For issuers using the mainboard alternative Regulation 6(4) route (75% QIB allocation), the quality of institutional engagement during the roadshow is critical: without strong QIB demand, the issue cannot be completed.
Subscription period: exchange co-ordination
During the subscription window, the BRLM co-ordinates with the exchanges’ Issue Modules, the sponsor banks handling UPI ASBA mandates, and the Self Certified Syndicate Banks handling bank ASBA applications. The BRLM monitors the live subscription data and manages investor queries. Under SEBI rules, the BRLM cannot share internal subscription data with investors during the window (which is visible only to the exchanges and registrar in real time); the publicly available subscription tally is the only permissible source.
Post-closure: pricing and allotment
On T+1 (the working day after issue close), the BRLM presents the consolidated order book to the issuer’s board, recommends a final issue price, and obtains board approval for the price and the category-wise allocation. The final issue price announcement is made to the exchanges, after which the registrar to the issue proceeds to finalise the basis of allotment . The BRLM files the final Prospectus with the Registrar of Companies after the allotment is finalised.
Underwriting
In a book-built mainboard IPO, the BRLM and co-managers collectively underwrite the issue, committing to subscribe to any portion of the issue not taken up by anchor investors, QIBs, NIIs, and retail investors. This commitment is formalised in an underwriting agreement between the BRLM, co-managers, and the issuer. For SME IPOs , the BRLM is the mandatory underwriter and also the mandatory market maker for three years after listing.
Fee structure
The BRLM’s compensation is typically structured as:
- Management fee: a percentage of the total issue proceeds, paid to the BRLM (and allocated among co-managers per the inter-se agreement), typically in the range of 1.5%-3% for a mid-sized issue and somewhat lower for a very large issue where the absolute rupee amount would otherwise be disproportionate.
- Underwriting fee: an additional fee for the underwriting commitment, typically 0.1%-0.5%.
- Selling commission: a commission payable to the BRLM for shares distributed through its own distribution network (applicable in issues where the BRLM also functions as a selling agent).
- Incentive fee / success fee: in some mandates, an additional fee tied to the issue being fully subscribed or achieving a specified listing-day premium.
All fees are disclosed in the RHP in the “other regulatory disclosures” section, including the total amount payable to each BRLM. This transparency is mandated by the ICDR.
Prominent Indian BRLMs
Several merchant banks dominate the Indian mainboard IPO market by deal count and deal value:
- Kotak Mahindra Capital Company Limited: consistently among the top-ranked BRLMs by deal value; managed BRLMs roles in LIC, Zomato, and Hyundai India IPOs.
- ICICI Securities Limited: a leading BRLM for both mainboard and SME issues.
- Axis Capital Limited: managed roles in multiple large IPOs including those of state-owned enterprises.
- SBI Capital Markets Limited: frequently appointed as BRLM for government disinvestment IPOs given its parent bank’s relationship with public-sector undertakings.
- HDFC Bank / HDFC Securities: active in mid-market mainboard issues.
- JM Financial Limited: a long-established merchant bank with a broad mainboard IPO track record.
- Edelweiss Financial Services and Anand Rathi Advisors: prominent in mid-market and SME segments.
For smaller SME IPOs, a set of SEBI-registered boutique merchant banks such as Unistone Capital, Pantomath Capital Advisors, and Hem Securities serve as BRLMs and mandatory market makers.
The BRLM in the context of research analyst regulations
SEBI’s Research Analyst Regulations, 2014 impose restrictions on the BRLM’s research team relative to the BRLM’s investment banking (IPO management) team. The Chinese Wall principle requires that the research analyst cannot share material non-public information received in the investment banking context with clients. Conversely, the investment banking team cannot use research analyst reports to promote the IPO. In the context of an IPO:
- The BRLM’s research analysts may study the publicly available DRHP and issue an internal analysis, but they cannot share non-public information obtained from the management roadshow.
- Research analysts at a BRLM are restricted from publishing promotional or strong-buy research on an IPO that their own firm is managing (SEBI Research Analyst Regulations, 2014, Regulation 26).
- Post-listing research initiated by the BRLM’s research team is typically produced with a mandatory disclosure that the BRLM was the lead manager of the IPO.
These restrictions create a quiet period dynamic: the BRLM’s research team may be the best-equipped entity to comment on the issuer’s prospects, but is restricted from doing so during the most commercially sensitive period of the issue.
Multi-BRLM structures and inter-se agreements
Large mainboard IPOs often appoint two to seven BRLMs (or more, in very large issues). The inter-se allocation agreement governs how the IPO management responsibilities are divided:
- Global co-ordinator and book running lead manager (GCBRLM): the senior-most role, responsible for overall issue management, the most important investor relationships, and (for international issues) co-ordination with offshore distributors.
- Book running lead manager (BRLM): a full co-manager role with shared responsibility for the book and shared fee allocation.
- Co-book running lead manager (co-BRLM): a junior co-manager role, typically with a smaller fee share and specific investor or geographic responsibilities.
The inter-se agreement is filed with the exchanges and is disclosed in the RHP, including the percentage of the underwriting commitment that each manager bears. In practice, the GCBRLM bears the largest underwriting risk and receives the largest management fee share.
International BRLMs in large Indian IPOs
Very large Indian IPOs that target foreign portfolio investors as a significant component of QIB demand often appoint international investment banks (such as Morgan Stanley, Goldman Sachs, JPMorgan Chase, Citigroup, or Bank of America) alongside domestic BRLMs. The international BRLM manages the offshore book-building process under Rule 144A and Regulation S exemptions from SEC registration, distributing shares to US Qualified Institutional Buyers and non-US investors. The domestic BRLMs manage the onshore book and retail distribution. The LIC IPO (2022), Hyundai India IPO (2024), and major banking-sector IPOs have all used international co-BRLMs in addition to the domestic BRLM slate.
References
- Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992.
- Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, Regulations 34 and Schedule V.
- Companies Act, 2013, Sections 34, 35, and 36, Liability for Misstatements in Prospectus.
- SEBI enforcement orders on BRLM due diligence failures, available at sebi.gov.in/enforcement.
- SEBI Annual Report, 2023-24, statistics on merchant banking registrations.
- Prime Database: Indian IPO League Tables 2023-24, BRLM league tables by deal count and value.
See also
- Draft Red Herring Prospectus , the BRLM’s primary filing
- Red Herring Prospectus , the binding offer document prepared by the BRLM
- Book building , the process managed by the BRLM
- Initial Public Offering , the broader context
- Anchor investor , the QIB sub-category that the BRLM negotiates with before the public window
- UPI ASBA , the retail application mechanism co-ordinated by the BRLM
- ASBA , the umbrella blocked-amount mechanism
- SME IPO , the SME segment where the BRLM also acts as mandatory market maker
- Registrar to an issue , the other key intermediary in an IPO
- SEBI (ICDR) Regulations, 2018 , the regulatory source