Meaning:-

Lead managers are independent financial institutions appointed by the company to manage the IPO. They are the main body responsible for most of the IPO processing.

Lead Manager:-

Companies planning for IPO (also known as Issuer Company) first approach or appoint lead managers. General managers review company records including financial records, litigation-related records such as business disputes, patent disputes, disputes with partners, etc., and other materials, in connection with the finalization of the draft red herring prospectus for the IPO.

Lead managers are responsible to write the Red Herring Prospectus (RHP) and get it approved by SEBI. SEBI contact lead managers for any irregularities or lapses in RHP and asks them to clarify, add or review certain sections of the document.

The Lead manager warrants to SEBI that all information provided in the Draft Red Herring Prospectus is true, correct, sufficient, and in accordance with SEBI guidelines to assist investors in making informed decisions.

Underwriters or union members are appointed by the Issuing Company with the assistance of the Director General of the IPO. Managing directors are responsible for the value of underwriters and their ability to purchase shares and insure them to SEBI. In brief Lead Manager’s responsibilities include, initiating the IPO processing, writing a draft herring prospectus and getting it approved by SEBI, helping the company in selling the IPO Shares and road shows, helping the company finalize the issue price, issuing opening & closing dates, listing date, etc.

Lead managers are also known as Book Running Lead Managers and Co-Book Running Lead Managers. Issuer Companies can appoint more than one lead manager to manage big IPOs i.e. Reliance Power IPO came in Jan 2008 and had 10 Book Running Lead Managers.

Activities of Lead Manager:-

The company must appoint one Lead Manager.  The activities of the Lead Manager which he has to undertake are summarized as follows:

1. Capital Structuring like the composition of debt and equity, type of instruments
2. Drafting  and design of offer document, advertisement, and publicity material
3. Completion of necessary formality with the registrar of companies, stock exchange and SEBI
4. Marketing of  issue i.e. advertisement, conferences of brokers, investors
5. Bankers to the issue
6. Collection centers
7. Brokers to issue
8. Underwriters
9. Distribution of publicity and issue material, application forms, prospectus, etc.
10. Selection of registrar to issue, printers, advertising agencies, bankers, etc.
11. Collecting information about subscriptions to issue
12. Post-issue activities i.e. finalization of basis of allotment, identifying and weeding out multiple applications, the listing of instruments with the stock exchange, dispatch of certificates and refund orders, bank reconciliation, etc. 

Lead Manager in Accordance with SEBI:-

There could be more than one lead manager. As per SEBI guidelines, the maximum number of lead managers should be 2 if the size of the issue is less than  Rs.50 Crore, 3 if the issue is between Rs. 50 to Rs.100 Crore, 4 if the issue is between Rs. 100 to Rs. 200 Crore, and five if the issue is over Rs. 200 Crore. In such cases, the allocation of responsibility of each lead manager should be fixed in advance in writing. Normally, post-issue activities should be handled only by one lead manager.

SEBI to Deal mainly with the Lead manager:-

Normally SEBI deals only with the lead manager. All queries of SEBI will be addressed to the lead manager. The lead manager is expected to liaison with the company issuing the share and reply to queries of SEBI. However, to speed up the work of clearance of offer documents, company representation is allotted to company the lead manager while visiting SEBI for clarification and discussion. Further, a copy of all query letters sent by SEBI to the lead manager will be sent to the company issuing shares.

Post-issue Obligation of Lead Manager:-

Lead managers should take effective steps to collect application forms from various collecting branches of the bank. Applications should be processed, allotment should be made and share certificate/refund orders should be sent quickly within the prescribed time. Lead Manager should take adequate care of the grievances of investors and should inform SEBI about the number of complaints, nature, and other particulars. If he fails to do so, he may be penalized or his registration may be suspected.

Reporting to SEBI by Lead Manager:-

The lead manager should report to SEBI in prescribed forms, regarding subscription report, compliance report, basis of allotment report, and final report. This report is in the case of subscribed public issues and right issues. Periodic reports in case of un-subscribed rights issues have also been prescribed. Non-submission of these reports by the lead manager in the stipulated time will mean penalty points to merchant bankers.

SEBI has prescribed two post-issue reports in case of public issues one after 3 days and another after 78 days. In the case of rights issues, 1st report should be after 3 days and another after 50 days. The report should be in the prescribed form. If lead managers do not submit these post-issue reports in time, penalty points will be imposed on them.

Certificate by Lead Manager:-

The lead manager has to issue various certificates at SEBI

(a) Due diligence certificate at the time of submission of draft prospectus

(b) Certificate that all amendments suggested an observations made by SEBI have been given effect to in the prospectus

(c) Fresh ‘due diligence certificate at the time of filling prospectus with the registrar of companies

(d) Fresh certificate before the opening of issue that no corrective action is needed

(e) Fresh final compliance certificate before the issue is closed for subscription.    

Lead Management:-

It is a term used in general business practice to describe methodologies, systems, and practices designed to generate new potential business clientele, generally operated through a variety of marketing techniques. Lead management facilitates a business’s connection between its outgoing consumer advertising and the responses to that advertising. These processes are designed for business-to-business and direct-to-consumer strategies. Lead management is in many cases a precursor to sales management and customer relationship management. This critical connectivity facilitates business profitability through the acquisition of new customers, selling to existing customers, and creating a market brand. This process has also accurately been referred to as customer acquisition management.

The general principles of lead management create an ordered structure for managing volumes of business inquiries, frequently termed leads. The process creates an architecture for the organization of data, distributed across the various stages of a sales process, and across a distributed sales force. With the advent of the Internet and other information systems technologies, this process has rapidly become technology-centric, as businesses practicing lead management techniques have shifted much of the prior manual workload to automation systems, though personal interaction with lead inquiries is still vital to success.

Along with its other related business practices–marketing, brand development, advertising, and sales–the goal of an effective lead management initiative is to generate new business revenue, increase visibility, and improve the general attitudes of potential clients and the public at large for future business development.

A distinctive outline of a lead management process might follow the following steps:

1. Business engages in a range of advertising media (Lead generation).
2. Recipients of advertising respond, creating a Customer inquiry, or lead.
3. Respondent’s information is captured (Inquiry Capture).
4. Captured information is then filtered to determine validity (Inquiry filtering)
5. The filtered leads are then graded and prioritized for potential (Lead grading)
6. Leads are then distributed to marketing and/or sales personnel (Lead distribution).
7. Leads are contacted for prospecting (Sales contact).
8. Contacted and uncontacted leads are entered into personal and automated follow-up processes (Lead nurturing).
9. End result is a new business sale (Sales result).

While simple in scope, lead (or inquiry) flow process can become complex as clients, prospective clients, and sales professionals interact. Interactions and subsequent actions create a variety of potential outcomes, both productive and counter-productive to business development. This ever-increasing number of scenarios creates functional disconnects, in other words, critical opportunities to mishandle an inquiry that reduces or destroys its potential value. Appropriate management of these scenarios is the function of lead management.

Conclusion :-

So from the above discussion we come to the conclusion that the lead manager are basically the independent financial body appointed by the company, which is going to the public for the share and this whole process is been maintain by the lead managers. The company approach to the lead manager then they examine the documents, verify the same, then continue the process as by the guidelines of the SEBI.