Description
the function of investment banking and merchant banking and differentiates between the two on various points
INVESTMENT BANKING Vs MERCHANT BANKING
INTRODUCTION
An investment bank is a financial institution that assists individuals, corporations and governments in raising capital by underwriting and/or acting as the client's agent in the issuance of securities . ? Unlike commercial banks and retail banks, investment banks do not take deposits.
?
DEFINATION
Investment banking is the traditional aspect of investment banks which involves helping customers raise funds in capital markets and giving advice on mergers And acquisitions. ? This may involve subscribing investors to a security issuance, coordinating with bidders, or negotiating with a merger target. ? The investment banking division (IBD) is generally divided into industry coverage and product coverage groups.
?
Function
Corporate Finance ? 1) Mergers and acquisitions advisory ? 2) Underwriting. ? Syndicate ? Syndicate provides a vital link between salespeople and corporate finance. ? Syndicate exists to facilitate the placing of securities in a public offering.
?
CORE ACTIVITIES
On behalf of the bank and its clients, a large investment bank's primary function is buying and selling products. ? High-net-worth investors to suggest trading ideas and take orders. ? Research is the division which reviews companies and writes reports about their prospects, often with "buy" or "sell" ratings.
?
OTHER ACTIVITIES
Global Transaction Banking. ? Investment Management. ? Merchant Banking. ? Risk Management. ? Financial Control. ? Small firms providing services of investment banking are called boutiques. These mainly specialize in bond trading, advising for mergers and acquisitions, providing technical analysis or program trading.
?
Raising Debt and Equity Capital
Opinions & Valuation
Investment Banking Mergers & Acquisition Private Equity Funds
TOP INVESTMENT BANKS
?
?
? ?
?
? ?
JP Morgan Goldman Sachs Bank of America Merrill Lynch. Morgan Stanley Citi Deutsche Bank Barclays Capital
MERCHANT BANKING
PRESENTED BY:
CHANDRA BHUSHAN TYAGI (2009MB36)
DEFINITION
A merchant banker is any person who is engaged in the business of issue management either by making arrangements regarding selling, buying or subscribing to securities or acting as manager/consultants/advisors or rendering corporate advisory service in relation to such issue management.
Major services of Merchant banks
? Determining
the composition of the capital
structure. ? Draft of prospectus and application forms ? Compliance with procedural formalties ? Appointments of registrars to deal with share application and transfer ? Listing of securities ? Arrangements of underwriters ? Placing of issue ? Publicity and advertisement
Registration
Four category of Merchant Bankers: ?Category I ?Category II
?Category III
Act as issue manager. Act as a co-manager. Can not under take portfolio manager.
?Category IV Act merely as consultant/ advisor.
With effect from Dec 9,1997, however, only category I merchant bankers are registered by SEBI. To carry on activities as portfolio manager, they have to obtain separate certificates of registration from the SEBI.
Grant of Certificate
?
The applicant shall be a body corporate other than a non-banking
financial company.
?
The applicant has the necessary infrastructure like adequate office space, equipments, and manpower to effectively discharge his activities.
?
The applicant has in his employment minimum of two persons who have the experience to conduct the business of merchant banker.
?
The applicant fulfils the capital adequacy requirement of Rs5 crore (INR 50 million).
Fee
A merchant banker has to pay to the SEBI
i.
ii. iii.
Application fee of Rs 25,000
Registration of Rs 10 lakhs Renewal fee of Rs 5 lakhs every three years from the fourth from the date of initial registration.
Importance and need of Merchant banking
Important reason for the growth of merchant banking in India is due to developmental activities and high GDP growth rate leading to more demand of fund from capital market.
Merchant banks have been procuring impressive support from capital market for the corporate sector for financing their projects.
The growth of Merchant Banking in India
Banks ?Grindlays Bank ?SBI ?ICICI ?Central bank of India & Bank of India ?Standard Charted Bank ?IFCI Year 1969 1972 1973 1977 1978 1986
?IDBI
1991
Reference
services by M Y Khan,4th edition. ? www.sebi.gov.in ? www.investopedia.com
? Financial
doc_428706381.pptx
the function of investment banking and merchant banking and differentiates between the two on various points
INVESTMENT BANKING Vs MERCHANT BANKING
INTRODUCTION
An investment bank is a financial institution that assists individuals, corporations and governments in raising capital by underwriting and/or acting as the client's agent in the issuance of securities . ? Unlike commercial banks and retail banks, investment banks do not take deposits.
?
DEFINATION
Investment banking is the traditional aspect of investment banks which involves helping customers raise funds in capital markets and giving advice on mergers And acquisitions. ? This may involve subscribing investors to a security issuance, coordinating with bidders, or negotiating with a merger target. ? The investment banking division (IBD) is generally divided into industry coverage and product coverage groups.
?
Function
Corporate Finance ? 1) Mergers and acquisitions advisory ? 2) Underwriting. ? Syndicate ? Syndicate provides a vital link between salespeople and corporate finance. ? Syndicate exists to facilitate the placing of securities in a public offering.
?
CORE ACTIVITIES
On behalf of the bank and its clients, a large investment bank's primary function is buying and selling products. ? High-net-worth investors to suggest trading ideas and take orders. ? Research is the division which reviews companies and writes reports about their prospects, often with "buy" or "sell" ratings.
?
OTHER ACTIVITIES
Global Transaction Banking. ? Investment Management. ? Merchant Banking. ? Risk Management. ? Financial Control. ? Small firms providing services of investment banking are called boutiques. These mainly specialize in bond trading, advising for mergers and acquisitions, providing technical analysis or program trading.
?
Raising Debt and Equity Capital
Opinions & Valuation
Investment Banking Mergers & Acquisition Private Equity Funds
TOP INVESTMENT BANKS
?
?
? ?
?
? ?
JP Morgan Goldman Sachs Bank of America Merrill Lynch. Morgan Stanley Citi Deutsche Bank Barclays Capital
MERCHANT BANKING
PRESENTED BY:
CHANDRA BHUSHAN TYAGI (2009MB36)
DEFINITION
A merchant banker is any person who is engaged in the business of issue management either by making arrangements regarding selling, buying or subscribing to securities or acting as manager/consultants/advisors or rendering corporate advisory service in relation to such issue management.
Major services of Merchant banks
? Determining
the composition of the capital
structure. ? Draft of prospectus and application forms ? Compliance with procedural formalties ? Appointments of registrars to deal with share application and transfer ? Listing of securities ? Arrangements of underwriters ? Placing of issue ? Publicity and advertisement
Registration
Four category of Merchant Bankers: ?Category I ?Category II
?Category III
Act as issue manager. Act as a co-manager. Can not under take portfolio manager.
?Category IV Act merely as consultant/ advisor.
With effect from Dec 9,1997, however, only category I merchant bankers are registered by SEBI. To carry on activities as portfolio manager, they have to obtain separate certificates of registration from the SEBI.
Grant of Certificate
?
The applicant shall be a body corporate other than a non-banking
financial company.
?
The applicant has the necessary infrastructure like adequate office space, equipments, and manpower to effectively discharge his activities.
?
The applicant has in his employment minimum of two persons who have the experience to conduct the business of merchant banker.
?
The applicant fulfils the capital adequacy requirement of Rs5 crore (INR 50 million).
Fee
A merchant banker has to pay to the SEBI
i.
ii. iii.
Application fee of Rs 25,000
Registration of Rs 10 lakhs Renewal fee of Rs 5 lakhs every three years from the fourth from the date of initial registration.
Importance and need of Merchant banking
Important reason for the growth of merchant banking in India is due to developmental activities and high GDP growth rate leading to more demand of fund from capital market.
Merchant banks have been procuring impressive support from capital market for the corporate sector for financing their projects.
The growth of Merchant Banking in India
Banks ?Grindlays Bank ?SBI ?ICICI ?Central bank of India & Bank of India ?Standard Charted Bank ?IFCI Year 1969 1972 1973 1977 1978 1986
?IDBI
1991
Reference
services by M Y Khan,4th edition. ? www.sebi.gov.in ? www.investopedia.com
? Financial
doc_428706381.pptx