What is Issue Management?
The management of issues for raising funds though various types of instruments by companies is known as Issue management. Issue management can be defined as managing the issues of corporate securities like equity shares, preference shares and debentures or bonds. Also marketing of capital issues, of existing companies, including rights issues and dilution of shares by letter of offer are included in it.
The function of capital issues management in India is carried out by merchant bankers who have the requisite professional skill and competence. One of their functions, in fact, is issue management. Factors such as the tremendous growth in the number and size of public listed companies, and the complexity arising due to the ever increasing SEBI requirements have all attributed to the increasingly significant role played by merchant bankers in the recent past.
The management of securities of the corporate sector offered to the public on a regular basis, and existing shareholders on a rights basis, is known as public issue management. Issue management is an important function if merchant bankers and lead managers.
The definition of merchant baker as contained in SEBI (Merchant Banker) Rules and Regulations. 1992 clearly brings out the significance of Issue Management as follows: any person who is engaged in the business of issue management either by making arrangement regarding selling, buying or subscribing to securities as manager, consultant advisor or rendering corporate advisory services in elation to such issue management.
A fast growing economy like India offers tremendous scope for issue management and the merchant bankers provide their skills and expertise to companies in the management of capital issues. This essentially aims at channeling household savings into the corporate sector through the issue of corporate securities. Companies raise funds for the purposes of financing new projects, expansion/ modernization/ diversification of existing units and augmenting long term resources for working capital purposes.