Raising Of Capital with Help from Investment Banking Companies

Every company needs to raise capital now and then to meet operational costs. This is done by selling equities and shares in the market. Investors buy the shares released in the market by the brokerage firms, and the money they pay for the shares is used as capital. The brokerage firms that are authorized by their clients to buy or sell shares on their behalf are called investment banking companies. These firms also help various companies in activities that involve merging and acquisition and trading in commodities, currency and bullion.

Role of banks

The banks act as middlemen between the companies and investors when stocks are issued. It helps in determining the price of financial instruments and helps the company to earn the maximum amount of revenue from these issues. For example, in the case of issuing IPOs or Initial Public Offerings the investment bank purchases all or the greater part of the shares directly from the company and pays the company the money for those shares. It then sells the shares to the public at prices that are higher than the amount it paid to the company. The company gains because it gets an immediate access to the funds while the bank gains as it makes a profit while selling the shares at a profit to the public.

Services to clients

The services offered by various stock brokerage companies acting as investment bankers includes IPOs, FPOs, QIPs, M&As, and others. The job of the investment banking firms is to initiate activities for raising capital with the issue of IPOs, FPOs, rights, and QIPs. The firms provide advisory services on mergers, acquisitions, and takeovers. They help in buyback and delisting activities. The firms issue various certificates such as the ESOP certificate, valuation certificate related to the acquisition of foreign companies, and certificates of fair value listing after any demerger that the company is involved in. For more information visit us : http://www.plindia.com/investment_banking.aspx

Mode of operation

The activities carried out by companies are mostly done with the help of three broad areas that are the front office, the middle office, and the back office. The front office carries out activities like advising companies on mergers and acquisitions, sales and research. Risk analysis and management are also carried out by the front office. The middle office is dedicated to tracking the flow of capital, and other internal functions that are required to increase profits. The back office uses the technology at their disposal to record, check and confirm the various transactions that are taking place and keep a record of everything that takes place.

Expertise of banks

The objective of the investment banking companies is to maintain a good rapport with the financial institutions, retail banks, high-value individuals, corporate and others to keep themselves updated on policy decisions and changes that take place. The connections with the top people in the financial world help them to design the best strategies that their clients can use to maximize their profits. The bank uses a team of professionals who are not only experts in their own disciplines but also have a good amount of banking experience.