A merchant banker is a financial institution registered with SEBI that manages public issues, provides financial advisory services, and performs underwriting, among other functions. While the term merchant banker is broad, it is often used interchangeably with lead manager in the context of IPOs. However, only a SEBI-registered merchant banker can be appointed as a lead manager to manage public issues.

Types of Merchant Bankers (as per SEBI classification):

Category I – Can manage public issues, provide advisory services, act as portfolio managers, and underwrite issues.
Category II – Can offer advisory and consulting services, act as portfolio managers and underwriters, but cannot manage public issues.
Category III – Limited to advisory, consulting, and underwriting services; cannot manage public issues or act as portfolio managers.
Category IV – Can only provide advisory and consultancy services, with no authority to manage issues, underwrite, or act as portfolio managers.

Appointment of Lead Managers for IPOs

An issuer company can appoint multiple merchant bankers as lead managers for an IPO. There is no restriction on the number of lead managers, but their roles and responsibilities must be clearly defined and reported to SEBI at least one month before the issue opens. These responsibilities must also be outlined in the offer document.

In summary, while all lead managers must be SEBI-registered merchant bankers, not all merchant bankers act as lead managers.

Lead Managers by Issues Managed - InvITs IPOs : 2025

Lead Managers by Issues Managed - InvITs IPOs : 2025