ABC of Share Market: What is GMP in IPO, role of Registrar and Book Running Lead Manager; know everything

What is GMP in IPO: Most of the investors in the stock market often turn to IPO (Initial Public Offering) to earn huge profits in a short time. But, before investing in IPO, there are some important things related to it, about which it is very important for investors to know. The most common question regarding which investors often have doubts is what is GMP, what is the role of the registrar and what does the book running lead manager do?

GMP (Grey Market Premium) in IPO is an informal indicator, which tells at what premium a company’s shares are trading in the unlisted i.e. gray market before listing.

Understand GMP in simple language here

Suppose the issue price of an IPO is Rs 100 and its GMP is Rs 40, then it means that the listing of the share can be around Rs 140. Although it is based only on market sentiment, it is neither controlled by SEBI nor is it guaranteed. Many times, despite having good GMP, shares are listed weakly and sometimes excellent listings are seen even without GMP.

What is the role of Registrar in IPO?

Whereas, Registrar is the organization which handles the administrative and operational tasks related to IPO. This includes applications received from investors, allotment of shares, refund process and transfer of shares to the demat account. In simple words, the registrar ensures that which investor gets how many shares and the money is adjusted correctly. In simple words, the Registrar ensures that the share allotment process is fair, accurate and completed on time. Companies like Link Intime, Kfin Technologies and MUFG Intime are major registrars in India.

About Book Running Lead Manager

Now let’s talk about Book Running Lead Manager (BRLM). It handles the entire planning and management of the IPO. These are usually big investment banks or brokerage firms, which help the company decide what should be the size of the IPO, what should be the price band and how much demand can come from investors. BRLM itself negotiates with the institutional investors and plays a key role in making the entire issue successful. Institutions like HDFC Bank, ICICI Securities, Kotak Mahindra Capital and SBI Capital Markets are often seen in this role.

Additionally, the book running lead manager markets the IPO, organizes road shows to attract investors and coordinates with underwriters, registrars and other intermediaries. Its objective is to ensure that the IPO gets a good response and the entire process is completed successfully without any hindrance.

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Very important in making IPO successful

According to market experts, in the IPO process, the roles of the registrar and the book running lead manager are different but interconnected, and only with their perfect coordination can an IPO become successful.