Snapshot of Issue managers’ role in issuing securities
Happy day, amazing people!!!
Let’s read the following short story to know about it.
Bridging Them
Chapter 1 – Wanting to Cross
Aiden started a toiletry business (self-care products). It became an instant hit and started to grow in manifolds. So, Aiden decided to increase the supply and take care of his growing organization. For which he needed funds. Hence, he decided to go public. (Meaning borrowing from the public in exchange for the share of his company) but he was overwhelmed by the process. His friends suggested him to go approach a merchant bank, which will take care of his IPO process (Initial Public Offering). They said that the merchant bank will act as a bridge between Aiden’s company and public in this transaction.
Chapter 2 – Preparation for crossing
Merchant bankers, when dealing with issuing of shares and bonds of the client company to the public they are called as issue managers or lead managers.
Hoping for the good, Aiden’s company approached and briefed the issue manager about their business operations, financial health, management and risk factors. They also briefed the percentage of the company going public, which is 20% in this case.
After the briefing session, issue manager checked whether the company has met the criteria for going public. Then they took the necessary steps in preparing the prospectus (offer document), underwriting the issues, pricing the issues and appointing financial intermediaries (for circulating and collecting the application forms from the public and for making the allotments to them). Marketing about the Aiden’s company’s IPO was also carried out by the issue manager.
Then they also made sure to meet the regulatory requirements (like filing of offer documents, memorandum of understanding, Inter-se Allocation of Responsibilities etc.,) of financial regulatory authority (SEBI, SEC, etc.,) and help the company to get listed in the stock exchange of their country. Issue manager also prepared a due diligence certificate stating that the company has complied with all the legal and regulatory requirements in drafting the offer document and submitted it to the regulatory authority.
| Do you Know? |
| The largest IPO until 2019 was by Saudi Aramco, which raised 29.4 billion dollars. |
Chapter 3 – Reaching the other side
After getting the green signal from the financial regulatory authority, Issue manager floated the issues of Aiden’s company in the market. The subscription of issues was kept opened for prescribed days. Interested public bought the issues and traded it in the stock market (secondary market).
Then, Aiden and company flourished happily ever after.
Ah… last line was just for fun
We hope you guys have understood about issue manager and their roles from this short glimpse.
Ok then before signing off
Love what you do, do what you love…. Bye
From,
Simply grasp