I have a question for people in IB.
What are the roles of the right bookrunners? Let's say you are an institutional investor. You always go to the lead bank to submit your commitment and hopefully receive allocations.
What exactly would a right bookrunner do? Do they control the allocations?
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Just capital/secondary providers. You have to look @ the Admin agent/Syndication agents after the lead left.
Basically get paid to do nothing except risk capital overnight. And obviously marketing to your client base to build up demand.
Mostly this. Active right bookrunners will sometimes help fill the book, depending on the logistics of the offering.
Right books is the dream... I used to dream about opening up a little shop in Atlanta, just junior Comanaging deals to my heart's content. No committee process, just me and Steve calling each other up "Hey Steve, we wanna do this thing?" "I'm good if you are." Boom.
Then I found that SunTrust Robinson Humphrey were living my dream... bastards...
got it. the economics just doesn't make sense if the right bookrunners don't do jack. i guess they just want to distribute the revolver hold.
The economics of capital markets transactions isn't determined by "who does the most work on the offering". It's determined by relationships and by the amount of unpaid work that firms have done outside the offering. Realistically, you only need one bank to accomplish most equity / debt offerings. The rest are being rewarded for some other work / relationship.
An example would be giving out econ based on tier/capital committed in the RCs/TLs.
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