Merchant bankers are registered financial institutions that play a critical role in the SME IPO issue process. They perform various functions including the following;
- Educating the applicant company and assisting in pre-IPO preparation
- Appointment of intermediaries and assessing their capabilities
- Conducting due diligence to ensure compliance with regulations
- Preparing DRHP and RHP, and submitting the final prospectus to the stock exchange
- Fixing the IPO issue price using either fixed pricing or book-building methods
- 100% Underwriting the issue to mitigate the risk of under-subscription
- Advertising and marketing the IPO to create demand for the securities
- Providing market-making arrangements post-listing for a minimum of 3 years to combat liquidity concerns.
