Who is Book Runner
The book runner is the primary underwriter or lead coordinator in the issuance of new equity, debt, or securities instruments. In investment banking, the book runner is the underwriting firm that runs or is in charge of the books. A large, leveraged buyout could involve multiple businesses; the book runner, representing one of the participating companies, coordinates with the other participating firms. Typically, one company takes the responsibility of running or managing the books, though more than one book runner (joint book runner) can control a security issuance.
BREAKING DOWN Book Runner
In investment banking, a syndicate is a group of underwriters who are responsible for placing a new equity, debt, or security issue with investors. To reduce risk, the book runner syndicates with other underwriting firms for the issuance of the new equity, debt or security.
Lead-Left Book Runner
The lead-left book runner, also called managing underwriter or syndicate manager, is listed first among the other underwriters participating in the issuance. The lead-left book runner plays the most important role in the transaction and will typically assign parts of the new issue to other underwriting firms for placement while retaining the most significant portion for themselves.
The lead-left book runner's name is the first bank to be listed on the prospectus, in the upper left-hand corner.
Book Runner Responsibilities
In the securities industry, an underwriter is a representative of a particular business entity, most often an investment bank, who works with corporations regarding the creation and issuing of public offerings. Underwriters work to guarantee that all documentation and reporting requirements are met, as well as work with potential investors to market the upcoming offering and gauge public interest. An underwriting institution may offer guarantees regarding the amount of stock that will be purchased and assume responsibility to buy securities to meet the minimum guarantee.
A book runner performs the same duties as an underwriter while also coordinating the efforts of multiple involved parties and information sources. In this regard, the book runner functions as a central point for all information regarding the potential offering or issue. This pivotal position may allow the book runner and his associated firm to know new information before it is widely known.
Book Creation for IPOs
One responsibility of the book runner is to create a book containing a working list, which is useful in tracking information about parties interested in participating in the new offering or issue. This information is used to help determine an opening price for an initial public offering (IPO) as well as to gain insight into the level of interest expressed by potential investors.