Book runner and lead manager plays the key role ipo
Joint Sponsors, Joint Global Coordinators and the book runner & joint lead manger play a very important role in the IPO process of the company. It is important to note here that individuals are not allowed to be part of the IPO process under any of these roles and thus this responsibility is taken up by the banks. The responsibilities of each have been discussed later providing an insight into the role of banks and the operations in the banking sector. The responsibility of each has been identified and although the same bank can be included under all three, but the responsibility has to be fulfilled as per the role assigned. These have been discussed below.
Joint Sponsor
The prospectus of The People’s Insurance Company (Group) of China Limited (PIC) provides the list of joint sponsors for the company. Glodman Sachs is the joint sponsor for the company along with others as mentioned in the prospectus.
Joint Global Coordinator
According to Espinasse (2011) a global coordinator is entitled to the extra share of fees deducting from the gross fees. It is important to understand here that the coordinator can play the role of book runner as well as the sponsor for the company issuing the IPO. However the streamlining of the syndicate structures has led to less meaningful role being played by global coordinator. However the role of coordinator assumes importance when there are a large number of banks to join a syndicate for the underwriting of the IPO. This is in particular the case when several sub syndicates were set up to distribute regional tranches. This is to say that the role of global coordinator is important in case of big IPO and also in the case when the number of members in the syndicate is large. Since the number of banks in the syndicate has been reducing, the role of global coordinator has become simpler.
Joint Book Runner and Joint Lead Manger
Book runners play the most important role. According to the prospectus of PIC, Goldman Sachs is the joint book runner and joint lead manger along with other banks that are included as book runner and joint lead manger. Book runner and lead manager plays the key role in an IPO. It involves controlling the book of demand (Espinasse, 2011). This is to say that the book runners maintains the list of orders placed by the institutional investors in the IPO. The most important role of the book runner is to decide on the allocation of stock to the institutional investor.
