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Currently, the investment banking scenario in India itself is extensive. But let us begin with understanding what investment banking is? What are its functions? So, investment banking offers a host of services to clients. An investment bank acts as an intermediary to assist corporate, HNIs, and companies in raising capital. Also, investment banking services include advisory facilities like Merger & Acquisition.
Most of the companies require cash for expanding their business. Investment banks help in this by issuing securities to investors. These securities could be stocks, bonds, debt, etc. Investment banking services not only entail capital raising facilities but also focuses on the trading of securities, custodian services, AMC, and other facilities. With the help of investment banking services, businesses can raise funds for their projects as well as an expansion for making themselves bigger in the market. For this purpose, they employ trained bankers and execute the operations for maximising the revenues. Investment banks bridge the gap between large enterprises and investors. However, the major role of them is to advise the Government and businesses on how to meet their financial needs and procure the finances. Role as an advisor Raising funds for the company is a daunting task, and this is where the service of investment comes in picture. An investment firm can help sell the company’s shares by deciding the excellent price using sophisticated financial models. Financial analysts consider aspects such as earning potential, management team strength, and so forth while selling the stocks. Investment banks also provide advice at the time of merger and acquisition by advising the management on how worth the company is and help in restructuring the firm. Underwriting stocks and bonds Underwriting is the process where the investment bank takes financial risks in exchange for a fee. It includes conducting research and assessing the risk levels involved in the insurer’s business. An investment bank buys a specific number of stocks at a previously decided price and recalls them through the exchange. It is the job of investment banking services for preparing the documentation which must pass through the Securities and Exchange Commission before the company can sell stocks anymore. Documentation involves details like financial statements, management information, current ownership, and retirement planning. Other facilities Besides advice and helping to raise funds for companies, investment banking services also includes research, trading and sales, asset management, wealth management, and securitised products.
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October 2020
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