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INTRODUCTION TO INVESTMENT BANKING
What is Investment Banking?
Investment banking is a multi-faceted practice area that involves structuring financial transactions for private and public companies into developed and emerging markets. Investment bankers identify capital opportunities, negotiate and structure deals, and execute private and public financial transactions. The essential function of an investment bank is to act as an intermediary between potential investors and those who seek capital. Investors include individuals, mutual funds, municipalities, public corporations, and private institutions.
Generally, capital is raised through the issuance of equity (stock), debt (bonds), or through a merger and acquisition (buying and selling part of a company). Investment bankers perform duties ranging from the preparation of disclosure documents and marketing materials for public offerings, to analyzing potential mergers and acquisitions for boards and shareholders. Investment banks offer many different practice areas that typically fall under broader classifications such as investment banking, investment management, merchant banking, finance and operations, information technology, global research, fixed income, risk management, and equities.
Who needs an Investment Bank?
Any firm contemplating a significant transaction can benefit from the advice of an investment bank. Although large corporations often have sophisticated finance and corporate development departments, an investment bank provides objectivity, a valuable contact network, allows for efficient use of client personnel, and is vitally interested in seeing the transaction close. Most small to medium sized companies do not have a large in-house staff, and in a financial transaction may be at a disadvantage versus larger competitors. A quality investment banking firm can provide the services required to initiate and execute a major transaction, thereby empowering small to medium sized companies with financial and transaction experience without the addition of permanent overhead.
THE ROLE OF THE INVESTMENT BANK
Raising Capital
An investment bank can assist a firm in raising funds to achieve a variety of objectives, such as to acquire another company, reduce its debt load, expand existing operations, or for specific project financing. Capital can include some combination of debt, common equity, preferred equity, and hybrid securities such as convertible debt or debt with warrants. Although many people associate raising capital with public stock offerings, a great deal of capital is actually raised through private placements with institutions, specialized investment funds, and private individuals. The investment bank will work with the client to structure the transaction to meet specific objectives while being attractive to investors.
Mergers and Acquisitions
Investment banks often represent firms in mergers, acquisitions, and divestitures. Example projects include the acquisition of a specific firm, the sale of a company or a subsidiary of the company, and assistance in identifying, structuring, and executing a merger or joint venture. In each case, the investment bank should provide a thorough analysis of the entity bought or sold, as well as a valuation range and recommended structure.
Sales and Trading
These services are primarily relevant only to publicly traded firms, or firms which plan to go public in the near future. Specific functions include making a market in a stock, placing new offerings, and publishing research reports.
General Advisory Services
Advisory services include assignments such as strategic planning, business valuations, assisting in financial restructurings, and providing an opinion as to the fairness of a proposed transaction.
WHAT TO LOOK FOR IN AN INVESTMENT BANK?
Investment banking is a service business, and the client should expect top-notch service from the investment banking firm. Generally only large client firms will get this type of service from the major investment banks; companies with less than about $100 million in revenues are better served by smaller investment banks. Some criteria to consider include:
Services Offered
For all functions except sales and trading, the services should go well beyond simply making introductions, or "brokering" a transaction. For example, most projects will include detailed industry and financial analysis, preparation of relevant documentation.
Experience
It extremely important to make sure that experienced, senior members of the investment banking firm will be active in the project on a day-to-day basis. Depending on the type of transaction, it may be preferable to work with an investment bank that has some background in your specific industry segment. The investment bank should have a wide network of relevant contacts, such as potential investors or companies that could be approached for acquisition.
Record of Success
Although no reputable investment bank will guarantee success, the firm must have a demonstrated record of closing transactions.
Ability to Work Quickly
Often, investment banking projects have very specific deadlines, for example when bidding on a company that is for sale. The investment bank must be willing and able to put the right people on the project and work diligently to meet critical deadlines.
Fee Structure
Generally, an investment bank will charge an initial retainer fee, which may be one-time or monthly, with the majority of the fee contingent upon successful completion of the transaction. It is important to utilize a fee structure that aligns the investment bank's incentive with your own.
Ongoing Support
Having worked on a transaction for your company, the investment bank will be intimately familiar with your business. After the transaction, a good investment bank should become a trusted business advisor that can be called upon informally for advice and support on an ongoing basis.
Because investment banks are intermediaries, and generally not providers of capital. The investment banker has a vested interest in making sure the transaction closes, that the project is completed in an efficient time frame, and with terms that provide maximum value to the client.
ACTIVITIES OF INVESTMENT BANKING
In the strictest definition, investment banking is the raising of funds, both in debt and equity, and the division handling this in an investment bank is often called the "Investment Banking Division" (IBD). However, only a few small firms solely provide this service. Almost all investment banks are heavily involved in providing additional financial services for clients, such as the trading of fixed income, foreign exchange, commodity, and equity securities.
Raising capital in the capital markets
The main activities and units
The primary function of an investment bank is buying and selling products both on behalf of the bank's clients and also for the bank itself. Banks undertake risk through proprietary trading, done by a special set of traders who do not interface with clients and through Principal Risk, risk undertaken by a trader after he or she buys or sells a product to a client and does not hedge his or her total exposure. Banks seek to maximize profitability for a given amount of risk on their balance sheet.
An investment bank is split into the so-called Front Office, Middle Office and Back Office. The individual activities are described below:
1)Front Office
Investment Banking is the traditional aspect of investment banks which involves helping customers raise funds in the Capital Markets and advising on mergers and acquisitions. Investment bankers prepare idea pitches that they bring to meetings with their clients, with the expectation that their effort will be rewarded with a mandate when the client is ready to undertake a transaction. Once mandated, an investment bank is responsible for preparing all materials necessary for the transaction as well as the execution of the deal, which may involve subscribing investors to a security issuance, coordinating with bidders, or negotiating with a merger target. Other terms for the Investment Banking Division include Mergers & Acquisitions (M&A) and Corporate Finance.
2)Middle Office
Middle Office involves analysing the market and credit risk that traders are taking onto the balance sheet in conducting their daily trades, and setting limits on the amount of capital that they are able to trade in order to prevent 'bad' trades having a detrimental effect to a desk overall. Another key Middle Office role is to ensure that the above mentioned economic risks are captured accurately (as per agreement of commercial terms with the counterparty) correctly (as per standardised booking models in the most appropriate systems) and on time (typically within 30 minutes of trade execution). In recent years the risk of errors has become known as "operational risk" and the assurance Middle Offices provide now include measures to address this risk. When this assurance is not in place, market and credit risk analysis can be unreliable and open to deliberate manipulation.
3)Back Office
Operations involves data-checking trades that have been conducted, ensuring that they are not erroneous, and transacting the required transfers. Whilst it provides the greatest job security of divisions within an investment bank, it is a critical part of the bank that involves managing the financial information of the bank and ensures efficient capital markets through the financial reporting function. The staff in these areas are often highly qualified and need to understand in depth the deals and transactions that occur across all the divisions of the bank.
Technology
Every major investment bank has considerable amounts of in-house software, created by the Technology team, who are also responsible for Computer and Telecommunications-based support. Technology has changed considerably in the last few years as more sales and trading desks are using electronic trading platforms. These platforms can serve as auto-executed hedging to complex model driven algorithms.
Size of industry
Global investment banking revenue increased for the third year running in 2005, to $52.8bn. This was up 14% on the previous year, but 7% below the 2000 peak. The recovery in the global economy and capital markets resulted in an increase in M&A activity, which has been the primary source of investment banking revenue in recent years. Credit spreads are tightening and intense competition within the field has ensured that the banking industry is on its toes.
The US was the primary source of investment banking income in 2005, with 51% of the total, a proportion which has fallen somewhat during the past decade. Europe (with Middle East and Africa) generated 31% of the total, slightly up on its 30% share a decade ago. Asian countries generated the remaining 18%. Between 2002 and 2005, fee income from Asia increased by 98%. This compares with a 55% increase in Europe, and a 46% increase in the US, during this period.
RECENT EVOLUTION OF THE BUSINESS
Investment banking is one of the most global industries and is hence continuously challenged to respond to new developments and innovation in the global financial markets. Throughout the history of investment banking, many have theorized that all investment banking products and services would be commoditized. New products with higher margins are constantly invented and manufactured by bankers in hopes of winning over clients and developing trading know-how in new markets. However, since these can usually not be patented or copyrighted, they are very often copied quickly by competing banks, pushing down trading margins.
Vertical Integration
Another trend in Investment Banking at the dawn of the 21st century has been the vertical integration of debt securitization. Previously, investment banks had assisted lenders in raising more lending funds and having the ability to offer longer term fixed interest rates by converting the lenders' outstanding loans into bonds. For example, a mortgage lender would make a house loan, and then use the investment bank to sell bonds to fund the debt, the money from the sale of the bonds can be used to make new loans, while the lender accepts loan payments and passes the payments on to the bondholders. This process is called securitization. However, lenders have begun to securitize loans themselves, especially in the areas of mortgage loans. Because of this, and because of the fear that this will continue, many Investment Banks have focused on becoming lenders themselves, making loans with the goal of securitizing them. In fact, in the areas of commercial mortgages, many Investment Banks lend at loss leader interest rates in order to make money securitizing the loans, causing them to be a very popular financing option for commercial property investors and developers .
POSSIBLE CONFLICTS OF INTEREST
Potential conflicts of interest may arise between different parts of a bank, creating the potential for financial movements that could be market manipulation.
Some of the conflicts of interest that can be found in investment banking are listed here:
Historically, equity research firms were founded and owned by investment banks. One common practice is for equity analysts to initiate coverage on a company in order to develop relationships that lead to highly profitable investment banking business. In the 1990s, many equity researchers allegedly traded positive stock ratings directly for investment banking business. On the flip side of the coin: companies would threaten to divert investment banking business to competitors unless their stock was rated favorably. Politicians acted to pass laws to criminalize such acts. Increased pressure from regulators and a series of lawsuits, settlements, and prosecutions curbed this business to a large extent following the 2001 stock market tumble.
Many investment banks also own retail brokerages. Also during the 1990s, some retail brokerages sold consumers securities which did not meet their stated risk profile. This behavior may have led to investment banking business or even sales of surplus shares during a public offering to keep public perception of the stock favorable.
Since investment banks engage heavily in trading for their own account, there is always the temptation or possibility that they might engage in some form of front running
ADVANTAGES TO USING AN INVESTMENT BANK
They have financial savvy of the public and private markets versus the typical entrepreneur. Usually provide pricing, timing, and distribution ideas for the offering.
The investment banker takes the risk of distributing the securities. After the contract is signed, the banker is “on the line” for these issues.
Most investment bankers who underwrite also make a market in the security, therefore, supporting the stock in the marketplace.
Certain investment bankers raise the prestige of a company and can generate short-term financing just by their affiliation.
INVESTMENT BANKING SERVICES
Mergers and Acquisitions
They manage the complete process for selling or buying a company or executing a merger between two companies. It is process driven and uses its senior-level strategy and technical resources to amplify critical steps in the M&A process, such as the development of quality presentation materials and the management of technical and operational due diligence.
Private Placements
They raise capital for clients across the entire spectrum of private equity funding sources, including early through later stage venture capital, mezzanine lenders, buyout firms, and strategic investors. They brings to a transaction a national investor network and the highest level of understanding of investors' criteria, preferences and structures to attract the capital that is right for your company. Our disciplined transaction approach manages and streamlines the entire financing process.
Divestitures
They help major corporations divest non-core assets that have value in the market either as standalone corporations or through a sale to other companies. This divestiture process is detailed and rigorous. They begin by assessing the factors that may inhibit or enhance the process, including the viability of the technology in the open market, the standalone capability of management, and the post-transaction integration issues. They advise corporate management on whether a divestiture, on all levels, is feasible. Finally, they help companies execute divestitures either by finding corporate buyers or securing financing to allow a spin-out to operate successfully on its own.
Restructuring and Financial Advisory
They enable clients to restructure and preserve valuable assets. Typical restructuring activities include management of the bankruptcy process, raising additional working capital, and negotiating revised financial terms with existing creditors. In addition, they often analyze and make detailed recommendations on how to reduce expenses internally, bolster marketing and sales efforts, and create a plan that demonstrates the potential of existing technology.
Valuations and Fairness Opinions
They bring a new level of diligence and precision to companies. In a regulatory environment that demands accountability, they delivers valuations and opinions that are noted for their depth of understanding of the company and the industry. Their work becomes a reliable piece of the foundation in a transaction process.
CUSTOMER SERVICES OF INVESTMENT BANK
They adapt to your method
They share your sense of urgency. As specialists they work with you to create a clear understanding of your needs. They work in concert with your decision-making process. They respect your need for a successful and timely transaction.
They keep you informed
When appropriate, they provide more data about a decision to be made. They keep you accurately informed to help you manage the risks associated with all financial decisions, whether it be a debt or equity portfolio or a private transaction. In instances where specific in-depth industry or fractional knowledge is required, they call on professionals to help us pinpoint problems, important issues and opportunities.
They seek your authorization before acting
The policies and tactics they propose will be described clearly in a proposal for your approval.
They represent you with discretion
They maintain a policy of confidentiality on all the information about your enterprise with the exception of subjects you authorize us to discuss in pursuit of your objectives.
The best time to call us is before making a financial decision. In this case they offer an independent analysis of your situation and provide valuable advice and alternatives.
Whatever you are contemplating they stand ready to gather and organize the appropriate data and work with you to evaluate the effective alternatives identified. On your behalf they organize tasks and simplify complex issues.
After they have gathered information and analyzed your situation, They position and package a portfolio of financial opportunities.
With a decision to seek financial consultation they help establish the net present value of the subject investment and determine a value range for negotiation and decision. Given your situation they will perform independent analyses to provide a vehicle for evaluating alternatives.
FEATURES OF INVESTMENT BANKING
The Investment Banking Group focuses on identifying, financing and advising emerging growth companies as they expand and develop into tomorrow’s market leaders. Roth is a leader in providing emerging growth companies with ready access to the capital markets and a wide variety of financial advisory services. By focusing exclusively on emerging growth companies, Roth has developed an unparalleled understanding of these companies, their entrepreneurial managers and their highly specialized financing needs. The Investment Banking Group features:
30 professionals with significant transaction and industry expertise.
A full spectrum of investment banking services including IPOs, Follow-ons / Registered Directs,PIPEs , M&A Advisory and Debt Capital Markets.
An exceptional client focus that is characterized by long term relationships and a history of advising clients on multiple transactions.
Deep domain expertise in technology, healthcare, financial services and consumer products
Comprehensive aftermarket support backed by Wall Street award winning research and a powerful distribution channel with the premier small-and micro-cap institutional investors
.
HINDUJA’S WAY OF INVESTMENT BANKING
The Hinduja Group builds strong relationships with its customers to fulfil their investment-banking and asset-management needs. Such relationships have to be based on :
Trust Which assures customers that their assets are safe.
Discretion Which ensures complete confidentiality
Reliability Through prompt and effective responses to customer needs and
Performance By consistently delivering the expected commercial results.
The Hinduja Group operates an independent global investment banking capability. The Investment Banking Division is broad based and has dedicated professional teams located in London, New York, Geneva and Mumbai.
This division has developed first hand commercial expertise in several key industry sectors around the world through the Hinduja group’s own businesses coupled with an excellent understanding of global capital markets.
With respect to institutional and individual investors, our performance in managing their assets is crucial to our success. The Asset Management business employs an “open architecture” system to deliver the full range of Theyalth management solutions for our clients. This enables us to run a customised investment platform that has the capability to offer asset allocation, risk analysis and selection of the best performing funds available, all backed up with personalised and quality service.
Overall, what distinguishes the Hinduja Group’s investment banking activities are:
• Quality of advice
• A clear understanding of clients’ needs
• Access to many capital sources
• Timely and efficient execution
What is Investment Banking?
Investment banking is a multi-faceted practice area that involves structuring financial transactions for private and public companies into developed and emerging markets. Investment bankers identify capital opportunities, negotiate and structure deals, and execute private and public financial transactions. The essential function of an investment bank is to act as an intermediary between potential investors and those who seek capital. Investors include individuals, mutual funds, municipalities, public corporations, and private institutions.
Generally, capital is raised through the issuance of equity (stock), debt (bonds), or through a merger and acquisition (buying and selling part of a company). Investment bankers perform duties ranging from the preparation of disclosure documents and marketing materials for public offerings, to analyzing potential mergers and acquisitions for boards and shareholders. Investment banks offer many different practice areas that typically fall under broader classifications such as investment banking, investment management, merchant banking, finance and operations, information technology, global research, fixed income, risk management, and equities.
Who needs an Investment Bank?
Any firm contemplating a significant transaction can benefit from the advice of an investment bank. Although large corporations often have sophisticated finance and corporate development departments, an investment bank provides objectivity, a valuable contact network, allows for efficient use of client personnel, and is vitally interested in seeing the transaction close. Most small to medium sized companies do not have a large in-house staff, and in a financial transaction may be at a disadvantage versus larger competitors. A quality investment banking firm can provide the services required to initiate and execute a major transaction, thereby empowering small to medium sized companies with financial and transaction experience without the addition of permanent overhead.
THE ROLE OF THE INVESTMENT BANK
Raising Capital
An investment bank can assist a firm in raising funds to achieve a variety of objectives, such as to acquire another company, reduce its debt load, expand existing operations, or for specific project financing. Capital can include some combination of debt, common equity, preferred equity, and hybrid securities such as convertible debt or debt with warrants. Although many people associate raising capital with public stock offerings, a great deal of capital is actually raised through private placements with institutions, specialized investment funds, and private individuals. The investment bank will work with the client to structure the transaction to meet specific objectives while being attractive to investors.
Mergers and Acquisitions
Investment banks often represent firms in mergers, acquisitions, and divestitures. Example projects include the acquisition of a specific firm, the sale of a company or a subsidiary of the company, and assistance in identifying, structuring, and executing a merger or joint venture. In each case, the investment bank should provide a thorough analysis of the entity bought or sold, as well as a valuation range and recommended structure.
Sales and Trading
These services are primarily relevant only to publicly traded firms, or firms which plan to go public in the near future. Specific functions include making a market in a stock, placing new offerings, and publishing research reports.
General Advisory Services
Advisory services include assignments such as strategic planning, business valuations, assisting in financial restructurings, and providing an opinion as to the fairness of a proposed transaction.
WHAT TO LOOK FOR IN AN INVESTMENT BANK?
Investment banking is a service business, and the client should expect top-notch service from the investment banking firm. Generally only large client firms will get this type of service from the major investment banks; companies with less than about $100 million in revenues are better served by smaller investment banks. Some criteria to consider include:
Services Offered
For all functions except sales and trading, the services should go well beyond simply making introductions, or "brokering" a transaction. For example, most projects will include detailed industry and financial analysis, preparation of relevant documentation.
Experience
It extremely important to make sure that experienced, senior members of the investment banking firm will be active in the project on a day-to-day basis. Depending on the type of transaction, it may be preferable to work with an investment bank that has some background in your specific industry segment. The investment bank should have a wide network of relevant contacts, such as potential investors or companies that could be approached for acquisition.
Record of Success
Although no reputable investment bank will guarantee success, the firm must have a demonstrated record of closing transactions.
Ability to Work Quickly
Often, investment banking projects have very specific deadlines, for example when bidding on a company that is for sale. The investment bank must be willing and able to put the right people on the project and work diligently to meet critical deadlines.
Fee Structure
Generally, an investment bank will charge an initial retainer fee, which may be one-time or monthly, with the majority of the fee contingent upon successful completion of the transaction. It is important to utilize a fee structure that aligns the investment bank's incentive with your own.
Ongoing Support
Having worked on a transaction for your company, the investment bank will be intimately familiar with your business. After the transaction, a good investment bank should become a trusted business advisor that can be called upon informally for advice and support on an ongoing basis.
Because investment banks are intermediaries, and generally not providers of capital. The investment banker has a vested interest in making sure the transaction closes, that the project is completed in an efficient time frame, and with terms that provide maximum value to the client.
ACTIVITIES OF INVESTMENT BANKING
In the strictest definition, investment banking is the raising of funds, both in debt and equity, and the division handling this in an investment bank is often called the "Investment Banking Division" (IBD). However, only a few small firms solely provide this service. Almost all investment banks are heavily involved in providing additional financial services for clients, such as the trading of fixed income, foreign exchange, commodity, and equity securities.
Raising capital in the capital markets
The main activities and units
The primary function of an investment bank is buying and selling products both on behalf of the bank's clients and also for the bank itself. Banks undertake risk through proprietary trading, done by a special set of traders who do not interface with clients and through Principal Risk, risk undertaken by a trader after he or she buys or sells a product to a client and does not hedge his or her total exposure. Banks seek to maximize profitability for a given amount of risk on their balance sheet.
An investment bank is split into the so-called Front Office, Middle Office and Back Office. The individual activities are described below:
1)Front Office
Investment Banking is the traditional aspect of investment banks which involves helping customers raise funds in the Capital Markets and advising on mergers and acquisitions. Investment bankers prepare idea pitches that they bring to meetings with their clients, with the expectation that their effort will be rewarded with a mandate when the client is ready to undertake a transaction. Once mandated, an investment bank is responsible for preparing all materials necessary for the transaction as well as the execution of the deal, which may involve subscribing investors to a security issuance, coordinating with bidders, or negotiating with a merger target. Other terms for the Investment Banking Division include Mergers & Acquisitions (M&A) and Corporate Finance.
2)Middle Office
Middle Office involves analysing the market and credit risk that traders are taking onto the balance sheet in conducting their daily trades, and setting limits on the amount of capital that they are able to trade in order to prevent 'bad' trades having a detrimental effect to a desk overall. Another key Middle Office role is to ensure that the above mentioned economic risks are captured accurately (as per agreement of commercial terms with the counterparty) correctly (as per standardised booking models in the most appropriate systems) and on time (typically within 30 minutes of trade execution). In recent years the risk of errors has become known as "operational risk" and the assurance Middle Offices provide now include measures to address this risk. When this assurance is not in place, market and credit risk analysis can be unreliable and open to deliberate manipulation.
3)Back Office
Operations involves data-checking trades that have been conducted, ensuring that they are not erroneous, and transacting the required transfers. Whilst it provides the greatest job security of divisions within an investment bank, it is a critical part of the bank that involves managing the financial information of the bank and ensures efficient capital markets through the financial reporting function. The staff in these areas are often highly qualified and need to understand in depth the deals and transactions that occur across all the divisions of the bank.
Technology
Every major investment bank has considerable amounts of in-house software, created by the Technology team, who are also responsible for Computer and Telecommunications-based support. Technology has changed considerably in the last few years as more sales and trading desks are using electronic trading platforms. These platforms can serve as auto-executed hedging to complex model driven algorithms.
Size of industry
Global investment banking revenue increased for the third year running in 2005, to $52.8bn. This was up 14% on the previous year, but 7% below the 2000 peak. The recovery in the global economy and capital markets resulted in an increase in M&A activity, which has been the primary source of investment banking revenue in recent years. Credit spreads are tightening and intense competition within the field has ensured that the banking industry is on its toes.
The US was the primary source of investment banking income in 2005, with 51% of the total, a proportion which has fallen somewhat during the past decade. Europe (with Middle East and Africa) generated 31% of the total, slightly up on its 30% share a decade ago. Asian countries generated the remaining 18%. Between 2002 and 2005, fee income from Asia increased by 98%. This compares with a 55% increase in Europe, and a 46% increase in the US, during this period.
RECENT EVOLUTION OF THE BUSINESS
Investment banking is one of the most global industries and is hence continuously challenged to respond to new developments and innovation in the global financial markets. Throughout the history of investment banking, many have theorized that all investment banking products and services would be commoditized. New products with higher margins are constantly invented and manufactured by bankers in hopes of winning over clients and developing trading know-how in new markets. However, since these can usually not be patented or copyrighted, they are very often copied quickly by competing banks, pushing down trading margins.
Vertical Integration
Another trend in Investment Banking at the dawn of the 21st century has been the vertical integration of debt securitization. Previously, investment banks had assisted lenders in raising more lending funds and having the ability to offer longer term fixed interest rates by converting the lenders' outstanding loans into bonds. For example, a mortgage lender would make a house loan, and then use the investment bank to sell bonds to fund the debt, the money from the sale of the bonds can be used to make new loans, while the lender accepts loan payments and passes the payments on to the bondholders. This process is called securitization. However, lenders have begun to securitize loans themselves, especially in the areas of mortgage loans. Because of this, and because of the fear that this will continue, many Investment Banks have focused on becoming lenders themselves, making loans with the goal of securitizing them. In fact, in the areas of commercial mortgages, many Investment Banks lend at loss leader interest rates in order to make money securitizing the loans, causing them to be a very popular financing option for commercial property investors and developers .
POSSIBLE CONFLICTS OF INTEREST
Potential conflicts of interest may arise between different parts of a bank, creating the potential for financial movements that could be market manipulation.
Some of the conflicts of interest that can be found in investment banking are listed here:
Historically, equity research firms were founded and owned by investment banks. One common practice is for equity analysts to initiate coverage on a company in order to develop relationships that lead to highly profitable investment banking business. In the 1990s, many equity researchers allegedly traded positive stock ratings directly for investment banking business. On the flip side of the coin: companies would threaten to divert investment banking business to competitors unless their stock was rated favorably. Politicians acted to pass laws to criminalize such acts. Increased pressure from regulators and a series of lawsuits, settlements, and prosecutions curbed this business to a large extent following the 2001 stock market tumble.
Many investment banks also own retail brokerages. Also during the 1990s, some retail brokerages sold consumers securities which did not meet their stated risk profile. This behavior may have led to investment banking business or even sales of surplus shares during a public offering to keep public perception of the stock favorable.
Since investment banks engage heavily in trading for their own account, there is always the temptation or possibility that they might engage in some form of front running
ADVANTAGES TO USING AN INVESTMENT BANK
They have financial savvy of the public and private markets versus the typical entrepreneur. Usually provide pricing, timing, and distribution ideas for the offering.
The investment banker takes the risk of distributing the securities. After the contract is signed, the banker is “on the line” for these issues.
Most investment bankers who underwrite also make a market in the security, therefore, supporting the stock in the marketplace.
Certain investment bankers raise the prestige of a company and can generate short-term financing just by their affiliation.
INVESTMENT BANKING SERVICES
Mergers and Acquisitions
They manage the complete process for selling or buying a company or executing a merger between two companies. It is process driven and uses its senior-level strategy and technical resources to amplify critical steps in the M&A process, such as the development of quality presentation materials and the management of technical and operational due diligence.
Private Placements
They raise capital for clients across the entire spectrum of private equity funding sources, including early through later stage venture capital, mezzanine lenders, buyout firms, and strategic investors. They brings to a transaction a national investor network and the highest level of understanding of investors' criteria, preferences and structures to attract the capital that is right for your company. Our disciplined transaction approach manages and streamlines the entire financing process.
Divestitures
They help major corporations divest non-core assets that have value in the market either as standalone corporations or through a sale to other companies. This divestiture process is detailed and rigorous. They begin by assessing the factors that may inhibit or enhance the process, including the viability of the technology in the open market, the standalone capability of management, and the post-transaction integration issues. They advise corporate management on whether a divestiture, on all levels, is feasible. Finally, they help companies execute divestitures either by finding corporate buyers or securing financing to allow a spin-out to operate successfully on its own.
Restructuring and Financial Advisory
They enable clients to restructure and preserve valuable assets. Typical restructuring activities include management of the bankruptcy process, raising additional working capital, and negotiating revised financial terms with existing creditors. In addition, they often analyze and make detailed recommendations on how to reduce expenses internally, bolster marketing and sales efforts, and create a plan that demonstrates the potential of existing technology.
Valuations and Fairness Opinions
They bring a new level of diligence and precision to companies. In a regulatory environment that demands accountability, they delivers valuations and opinions that are noted for their depth of understanding of the company and the industry. Their work becomes a reliable piece of the foundation in a transaction process.
CUSTOMER SERVICES OF INVESTMENT BANK
They adapt to your method
They share your sense of urgency. As specialists they work with you to create a clear understanding of your needs. They work in concert with your decision-making process. They respect your need for a successful and timely transaction.
They keep you informed
When appropriate, they provide more data about a decision to be made. They keep you accurately informed to help you manage the risks associated with all financial decisions, whether it be a debt or equity portfolio or a private transaction. In instances where specific in-depth industry or fractional knowledge is required, they call on professionals to help us pinpoint problems, important issues and opportunities.
They seek your authorization before acting
The policies and tactics they propose will be described clearly in a proposal for your approval.
They represent you with discretion
They maintain a policy of confidentiality on all the information about your enterprise with the exception of subjects you authorize us to discuss in pursuit of your objectives.
The best time to call us is before making a financial decision. In this case they offer an independent analysis of your situation and provide valuable advice and alternatives.
Whatever you are contemplating they stand ready to gather and organize the appropriate data and work with you to evaluate the effective alternatives identified. On your behalf they organize tasks and simplify complex issues.
After they have gathered information and analyzed your situation, They position and package a portfolio of financial opportunities.
With a decision to seek financial consultation they help establish the net present value of the subject investment and determine a value range for negotiation and decision. Given your situation they will perform independent analyses to provide a vehicle for evaluating alternatives.
FEATURES OF INVESTMENT BANKING
The Investment Banking Group focuses on identifying, financing and advising emerging growth companies as they expand and develop into tomorrow’s market leaders. Roth is a leader in providing emerging growth companies with ready access to the capital markets and a wide variety of financial advisory services. By focusing exclusively on emerging growth companies, Roth has developed an unparalleled understanding of these companies, their entrepreneurial managers and their highly specialized financing needs. The Investment Banking Group features:
30 professionals with significant transaction and industry expertise.
A full spectrum of investment banking services including IPOs, Follow-ons / Registered Directs,PIPEs , M&A Advisory and Debt Capital Markets.
An exceptional client focus that is characterized by long term relationships and a history of advising clients on multiple transactions.
Deep domain expertise in technology, healthcare, financial services and consumer products
Comprehensive aftermarket support backed by Wall Street award winning research and a powerful distribution channel with the premier small-and micro-cap institutional investors
.
HINDUJA’S WAY OF INVESTMENT BANKING
The Hinduja Group builds strong relationships with its customers to fulfil their investment-banking and asset-management needs. Such relationships have to be based on :
Trust Which assures customers that their assets are safe.
Discretion Which ensures complete confidentiality
Reliability Through prompt and effective responses to customer needs and
Performance By consistently delivering the expected commercial results.
The Hinduja Group operates an independent global investment banking capability. The Investment Banking Division is broad based and has dedicated professional teams located in London, New York, Geneva and Mumbai.
This division has developed first hand commercial expertise in several key industry sectors around the world through the Hinduja group’s own businesses coupled with an excellent understanding of global capital markets.
With respect to institutional and individual investors, our performance in managing their assets is crucial to our success. The Asset Management business employs an “open architecture” system to deliver the full range of Theyalth management solutions for our clients. This enables us to run a customised investment platform that has the capability to offer asset allocation, risk analysis and selection of the best performing funds available, all backed up with personalised and quality service.
Overall, what distinguishes the Hinduja Group’s investment banking activities are:
• Quality of advice
• A clear understanding of clients’ needs
• Access to many capital sources
• Timely and efficient execution