CS Professional · Strategic Management and Corporate Finance · Role of Intermediaries in Fund Raising
Arjun Pharma Ltd issues 40,00,000 equity shares in a book-built public issue at Rs 150 per share. The lead manager's fee is 1.5% of the issue size. What is the lead manager's fee?
The issue size is 40,00,000 shares at Rs 150, which is Rs 60 crore. At 1.5%, the lead manager's fee is Rs 90,00,000. Choosing Rs 60,00,000 would apply only 1%, and the other figures misplace the decimal.
- ARs 90,00,000Correct
- BRs 60,00,000
- CRs 9,00,000
- DRs 9,00,00,000
Explanation
Issue size = 40,00,000 x 150 = Rs 60,00,00,000. Fee = 1.5% x 60,00,00,000 = Rs 90,00,000. Check: 1% is Rs 60,00,000 and 0.5% is Rs 30,00,000, total Rs 90,00,000. Rs 60,00,000 is only 1% of the issue size, a wrong rate.
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