Book Runner

Key Highlights

• A Book Runner is the main investment bank or financial institution responsible for managing and leading the process of an Initial Public Offering (IPO) or other public issue of securities.

• The Book Runner is responsible for the book building process, where investor demand is collected to determine the final price of the securities being issued.

What is a Book Runner?

A Book Runner is the main investment bank or financial institution responsible for managing and leading the process of an Initial Public Offering (IPO) or other public issue of securities. It plays a central role in coordinating the offering, setting the price band, and allocating shares to investors.

When multiple banks are involved, the lead one is called the Lead Book Runner or Left Lead.

Role of a Book Runner

The Book Runner is responsible for the book building process, where investor demand is collected to determine the final price of the securities being issued. Its key responsibilities include:

1. Creating the Offer Document: Helps draft the prospectus that contains details of the offering.

2. Marketing the Issue: Conducts roadshows and investor meetings to promote the IPO or bond issue.

3. Collecting Bids (Book Building): Maintains the order book showing how much demand there is at various price levels.

4. Price Discovery: Based on demand, the Book Runner helps set the final issue price within the pre-decided price band.

5. Share Allocation: Coordinates allotment of shares to institutional, retail, and other investors.

6. Stabilization: May also help stabilize the share price post-IPO if it falls below the offer price.

Types of Book Runners

1. Lead Book Running Manager (LBRM): The primary bank or institution leading the entire process.

2. Co-Book Runners: Assist the lead but with a smaller role in marketing and distribution.

3. Syndicate Members: Other banks or brokers involved in selling the issue but not managing the book.

Book Runner in India

In India, IPOs often involve one or more Book Running Lead Managers (BRLMs). These are registered with SEBI and follow regulations for pricing, disclosures, and investor protection.

Example

For a large IPO like LIC or Zomato, multiple book runners may be involved to handle wide investor demand across retail and institutional categories.

Book Runner vs Underwriter

Feature	Book Runner	Underwriter
Main Function	Manages the offering and price discovery	Guarantees sale of securities (may also be book runner)
Price Role	Collects bids and sets price	May commit to buy unsold shares at a fixed price
Risk	Less financial risk	Takes on risk of unsold shares