How to check the performance of Lead Manager in the SME IPO

An SME IPO, also known as a Small and Medium Enterprises Initial Public Offering, is a method for small and medium-sized companies to raise capital by offering their shares to the public for the first time. Going public through an IPO can be a significant milestone for SMEs as it provides access to a wider pool of capital and helps establish their reputation in the market. However, the success of an IPO depends on several factors, one of which is the selection of the right lead manager. In this article,  we will discuss lead manager, the role of a lead manager, the importance of selecting the right lead manager and how to evaluate their performance in managing an SME IPO.

What is a Lead Manager?

A lead manager is a registered merchant banker appointed by the issuer company to manage and oversee the entire IPO process. Their role includes underwriting the issue, marketing and promoting the issue to potential investors, coordinating with other intermediaries, and ensuring compliance with regulatory requirements. In short, the lead manager acts as a bridge between the issuer company and the investors.

Importance of Selecting the Right Lead Manager

The lead manager plays a critical role in the success of an SME IPO. They are responsible for managing and overseeing the entire IPO process, including underwriting the issue, marketing and promoting the issue to potential investors, coordinating with other intermediaries, and ensuring compliance with regulatory requirements. The lead manager acts as a bridge between the issuer company and the investors, and their performance can significantly impact the success of the IPO and the company’s reputation in the market.

Therefore, selecting the right lead manager is crucial for the success of an SME IPO. The lead manager should have a good track record in managing previous IPOs, the ability to market and promote the issue effectively, and a robust mechanism for handling investor grievances. The lead manager should also ensure compliance with regulatory requirements and provide post-IPO support to the issuer company.

How to Check the Performance of Lead Manager in SME IPO?

Here are some important aspects to consider while evaluating the performance of lead manager in SME IPO:

Track Record:

Before selecting a lead manager, it is essential to check their track record in managing previous IPOs. Look for their success rate in terms of oversubscription, listing gains, and long-term price performance of the shares post-listing. A lead manager with a good track record indicates their efficiency in managing IPOs.

Quality of Marketing and Promotions:

One of the primary responsibilities of a lead manager is to market and promote the issue to potential investors. Look for the quality and effectiveness of their marketing and promotional activities. It includes the number of roadshows conducted, the type of investors reached out to, and the level of investor education provided.

Allocation of Shares:

Another critical aspect to check is the allocation of shares to various investor categories. It is essential to ensure that the lead manager has allocated shares in a fair and transparent manner, without any biases towards any particular category of investors.

Compliance with Regulatory Requirements:

A lead manager should ensure that the IPO complies with all regulatory requirements of the Securities and Exchange Board of India (SEBI). Check if the lead manager has followed all the necessary steps, such as obtaining necessary approvals, filing the draft prospectus, and ensuring timely disclosures.

Investor Grievance Redressal:

A lead manager should also have a robust mechanism for handling investor grievances. Look for the quality and speed of their response to investor complaints and grievances.

Post-IPO Support:

After the IPO, the lead manager should continue to provide support to the company in terms of investor relations, market intelligence, and regulatory compliance. Check if the lead manager has provided adequate post-IPO support to the issuer company. The lead manager should be able to provide the issuer company with regular updates on market trends and investor sentiment

Selecting the right lead manager is critical for the success of an SME IPO. Evaluating the lead manager’s performance is essential to ensure that they have performed their duties efficiently and effectively. The factors mentioned above can help you assess the lead manager’s performance in managing an SME IPO. It is always advisable to conduct thorough research and seek advice from industry experts before finalizing the lead manager.