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What is the role of merchant banker in SME IPO?

Merchant bankers are registered financial institutions that play a critical role in the SME IPO issue process. They perform various functions including the following;

  1. Educating the applicant company and assisting in pre-IPO preparation
  2. Appointment of intermediaries and assessing their capabilities
  3. Conducting due diligence to ensure compliance with regulations
  4. Preparing DRHP and RHP, and submitting the final prospectus to the stock exchange
  5. Fixing the IPO issue price using either fixed pricing or book-building methods
  6. 100% Underwriting the issue to mitigate the risk of under-subscription
  7. Advertising and marketing the IPO to create demand for the securities
  8. Providing market-making arrangements post-listing for a minimum of 3 years to combat liquidity concerns.
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