Investment banking

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Investment banking

  1. 1. FUNDAMENTAL OF INVESTMENT BANKING
  2. 2. MEANING :- A specific division of banking related to the creation of capital for other companies. Investment banks underwrite new debt and equity securities for all types of corporations. This is different from a commercial bank, which specializes in deposits and commercial loans. investment banking include investment trusts,loan and finance companies.
  3. 3. How It works:- Investment banks mediate between companies that issue securities and the individuals or entities wishing to purchase them. In this respect, investment banks operate along two main lines: a "buy" side and a "sell" side. "Buy" side operations include services such as securities trading and portfolio management. "Sell" side activities include underwriting new lines of stock, marketing financial products, and publishing financial research.
  4. 4. Investment Banking Services When companies seek out an investment banking relationship, they are interested in a financial partner that can guide them through the complicated landscape related to financing a business and managing its assets. Investment bankers offer executives strategic planning advice. They often advise company executives about the best times to make a public offering or on asset management Subject matter.
  5. 5. DIVISION OF INVESTMENT BANKING:- • Mergers and Acquisitions (M&A) - advisory on sale, merger and purchase of companies • Leveraged Finance (LevFin) - issuance of high-yield debt to firms to finance acquisitions and other corporate activities • Equity Capital Markets (ECM) - advice on equity and equity-derived products (IPOs, shares, capital raises, secondary offerings etc.) • Debt Capital Markets (DCM) - advice on raising and structuring of debt to finance acquisitions and other corporate activities • Restructuring – improving the structures of a company to make it more profitable or efficient
  6. 6. Importance of Investment Banking:- • For corporations- raising its capital. It facilitates the trading of securities thereby, increasing the liquidity of the securities. • For Individuals- It provides investment opportunities to the individuals or entities. • Most of the corporations get advisory services from the investment banks regarding the mergers, acquisitions and divestiture.
  7. 7. Why It Matters:- Investment banks bring investors together with companies that issue securities and broker securities. Investment banks are also beneficial to security-issuing companies because while they broker the securities a company may issue, they can help raise capital funds for such companies through underwriting new stock offerings.
  8. 8. Problems Of Investment Banking in India • Diversification Towards Capitals Markets • No Proper System Of Investment Banking In India • Lack Of Institutional Financing
  9. 9. EXAMPLE OF INVESTMENT BANK:- LIC:- • Life Insurance Corporation of India (LIC) is the largest insurance group and investment company in India. The life insurance business was nationalised on 19th January, 1956 and the Life Insurance Corporation of India came into being on 1st September, 1956 to carry on life business in India with capital of Rs.5 crores contributed by the Central Government. The functions of the Corporation shall be to carry on and develop life insurance business to the best advantage of the community. • The Corporation shall have power – - to acquire, hold and dispose of any property for the purpose of its business. - to advance or lend money upon the security of any movable or immovable property or otherwise. - to borrow or raise any money in such manner and upon such security as the Corporation may think fit .
  10. 10. Industrial Development Bank of India The IDBI was established to provide credit for major financial facilities to assist with the industrial development of India. It was established in 1964 by RBI, and was transferred to the government of India in 1976. Functions:- • Direct assistance: helps the industrial sector by granting project loans, underwriting of and direct subscription to the industrial securities (shares and debentures), and technical development funds. • Coordinating functions: coordinates the functions of financial institutions such as ICICI, IFCI, LIC and GIC, with respect to industrial development. • Indirect assistance to small and medium enterprises by granting loans. It also refinances industrial loans of the SFC's, SIDCs, commercial banks and RRBs, along with the billing related to the sale of the indigenous machinery. • Raising funds from the international money markets.
  11. 11. HDFC BANK:- • HDFC Bank Limited is an Indian financial services company based in Mumbai, Maharashtra that was incorporated in August 1994. HDFC Bank is the fifth largest bank in India by assets and the largest bank by market capitalization as of 1 November 2012. The bank was promoted by the Housing Development Finance Corporation, a premier housing finance company (set up in 1977) of India.

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