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Investment banking is a type of non-banking financial service provided to a large number of clients for undertaking capital market activities. An investment banker is a type of financial institution that provides investment banking services. For instance, all the tasks involved in floating a public issue are taken care of by an investment banker.
An investment banker is different from a normal bank. The latter one is mainly concerned with the creation and channelizing of credit in an economy while the former provides a specialized service to support an organization sail easily through capital market operations.
Some of the investment banking services is:
Raising equity capital
An investment banker helps an organization to raise capital through
corporate finance advisors any source, be it an initial public offering or through private placement. They perform all the activities within the domain of raising funds. They also underwrite an issue in case of under subscription and prepare the required prospectus. The banker deals in all types of shares, for instance, preference shares, equity shares, etc.
Raising debt capital
In a debt market, all the formalities and procedures to raise funds through issue of debt-instruments like debentures and bonds are handled by the banker for its clients.
Providing necessary financial advice
The banker gives buying and selling tips to its clients operating in the derivative market and the secondary market. They also give advice on how an organization can manage their financial portfolio to have minimum risks and maximum returns. Sometimes, they act as intermediaries by trading on behalf of the clients.
Apart from these, there is another important aspect of investment banking, merger and acquisition. Investment banking M&A offers bank partners to work as exclusive financial advisor in case of strategic alliances, divestitures, restructuring, judgmental opinions, and buy outs.
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