A bookrunner is an underwriter who manages the offering books of securities for sale in a new investment issue. They act as a central repository of information and can function as a mechanism for multiple investors to work together. The bookrunner can be an individual or an entity with financial management experience.
The book runner is an underwriter who maintains and manages the offering books of securities offered for sale as part of a new investment issue. This designation is a reference to the book management process, also known as “enforcement” in the industry. While there may be several underwriters involved in the matter, only the underwriter or company that acts as an intermediary for all underwriting activity is referred to as the bookrunner.
One of the major benefits of a bookrunner is that the location serves as a central repository of all information relevant to the design and current state of the investment issue. The book runner serves as the ultimate source of data on the problem. Typically, the entity that manages the books has access to updates and other pertinent information before they are available to the general public.
A bookrunner also functions as a mechanism for multiple investors to work together on a particular issue. For example, when a company acquisition occurs that requires the participation of several companies or investors, one company is designated as the bookrunner. This single partner establishes the communication line to complete the transaction on behalf of all investors and ensures that the interests of each participating party are protected.
It is not unusual for a group of investors to get together for the purpose of making an investment of some kind. The group can designate one of their own to act as bookrunner, establish a pool of reserves and allow the runner to engage in negotiating the deal on behalf of all participants. In turn, the bookrunner is accountable to all members of the group or consortium, ensuring they have access to the books and also setting a consistent schedule for making regular reports to the group at large.
In many cases, the bookrunner will be an entity with extensive financial management experience, such as an investment bank. However, that’s not necessarily the case. Many countries around the world would allow individual investors to act as the driving force behind a deal and act as a bookrunner for a group of investors. As long as the runner is able to meet the minimum requirements set in the country of origin and is trusted by all participants in the deal, the book runner can be virtually anyone.
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