Roles in the IPO Process: Lead Manager vs Bookrunner

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What kind of roles do lead manager and bookrunner play in a deal?

Please note that this thread focuses on the equity issuance process.

What is an underwriter?

Put simply - underwriters are the banks that sell IPO shares to institutions.
They include all of the banks that sell the IPO shares to institutions. Typically underwriters are segregated into bookrunners and co-managers.

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What is a Lead Manager? What is a co-manager?

The lead manager is the "lead left" manager of the initial public offering process. For reference, "to place" a portion of the deal means to find buyers for a chunk of the stock offering. The lead manager found the majority of the deal and placed it.
Co-managers are listed after lead manager. They assisted in placing the deal but not as much as the lead manager and are not as significant. The small names listed are syndicate members who placed correspondingly smaller parts of the deal but didn't have anything to do with the underwriting process.

What is the syndicate?

The syndicate is the network of banks that finds buyers for the sale of stock. During an IPO or follow on the process there could be as many as 12 syndicate banks.

Downtown - Hedge Fund Portfolio Manager:

Usually to get to the most customers there are as many as twelve other syndicate banks, who buy blocks of stock to sell to their clients for higher prices than they bought it for. But they are kind of along for the ride.

What is a Bookrunner?

The book runner is the main underwriter or lead manager in the issuance of new equity, debt or securities instruments. In investment banking, the book runner is the underwriting firm that runs, or who is in charge of, the books. These firms are responsible for tracking the parties interested in purchasing the IPO in order to help determine demand and price.

Source Quora

Downtown - Hedge Fund Portfolio Manager:

Bookrunners do the majority of the work and collect the largest percentage of fees. Co-managers play a more passive role in the deal execution but usually initiate research coverage on the company afterward.

A joint bookrunner is when there is more than one bank acting as the bookrunner/manager.?

What is an Arranger?

An arranger is the lead bank in the syndicate process for debt. This bank will typically put up a larger portion of the loan and perform administrative duties.

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Comments (11)

Aug 10, 2009

Being the lead manager in a deal means that you are structuring the deal. They don't want clients at other banks knowing this, but most of the profits from the deal can be gotten by what they call "the skim" (at least at my banks). Its basically the amount they can sell to the institutional public above the price they underwrote it for for the company. The lead manager makes all the decisions about price, timing, how to run the roadshow, what type of auction they will pursue, who gets stock, etc. The bookrunner is usually the lead manager but doesn't have to be. They are basically in charge of "keeping the book" which simply means keeping record of who bought shares for how much. Every bank wants to be the lead manager, because that means they get the best price for themselves and their customers, meaning fatter comissions.

Usually to get to the most customers there are as many as twelve other syndicate banks, who buy blocks of stock to sell to their clients for higher prices than they bought it for. But they are kind of along for the ride.

Hope this helps

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Aug 10, 2009
furiousgeorge86:

Being the lead manager in a deal means that you are structuring the deal. They don't want clients at other banks knowing this, but most of the profits from the deal can be gotten by what they call "the skim" (at least at my banks). Its basically the amount they can sell to the institutional public above the price they underwrote it for for the company. The lead manager makes all the decisions about price, timing, how to run the roadshow, what type of auction they will pursue, who gets stock, etc. The bookrunner is usually the lead manager but doesn't have to be. They are basically in charge of "keeping the book" which simply means keeping record of who bought shares for how much. Every bank wants to be the lead manager, because that means they get the best price for themselves and their customers, meaning fatter comissions.

Usually to get to the most customers there are as many as twelve other syndicate banks, who buy blocks of stock to sell to their clients for higher prices than they bought it for. But they are kind of along for the ride.

Hope this helps

I am pretty sure this only applies to I-Grade deals these days. Pretty much every HY issue has been best efforts meaning the bookrunners (lead and one to 3 co-books) share the majority of the execution and diligence with several co-managers helping to syndicate. In a typical HY deal with 200 bps in fees, the bookrunner will split at least 150bps with the 4-5 other comanagers just getting a small piece of the 50 bps.

Aug 10, 2009

Good point, I can't speak for high yield as I was working in investment grade.

Best Response
Aug 10, 2009

Underwriters include all of the banks that sell the IPO shares to institutions. Typically underwriters are segregated into bookrunners and co-managers. Bookrunners do the majority of the work and collect the largest % of fees. Co-managers play a more passive role in the deal execution but usually initiate research coverage on the company afterwards.

Some equity deals will add additional titles and responsibilities to these roles so that fees are split a certain way or so one bank gets more promotional credit. I think this is what a "global coordinator" is: just a way for the lead bookrunner to further separate themselves from the others. Probably means that bank will coordinate all of the roadshow, lead discussions with the company, etc.

I haven't really heard of a lead manager position for equity deals.

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Aug 10, 2009

JPMorgan has a lead role and will take a higher fee. in charge of distribution

Aug 10, 2009

Basically... JPM will coordinate everything, work on the roadshow presentation, and take care of all the client's requests and needs (basically all the "real" work for the IBD side), and also underwrite the largest portion of shares (thus get the highest economics), while Wells will just underwrite a larger portion of the shares than the rest of the managers and thus get higher economics.

Pretty much being a manager on an equity offering sucks balls, because the only work you really do is internal/admin-type stuff.

Aug 10, 2009

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