What is Investment Banking?
An investment bank is a financial institution that aids corporations and governments in raising capital, facilitates mergers and acquisitions, and engages in trading various financial instruments such as derivatives, fixed income products, foreign exchange, commodities, and equity securities.
These banks serve as intermediaries between security issuers and investors, assisting new firms in going public. They may either purchase all available shares at a price determined by their experts and resell them to the public, or sell shares on behalf of the issuer and earn a commission on each share sold.
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.
Investment banking product groups comprise the following types of deals:
Underwriting – Capital raising and underwriting groups work between investors and companies that want to raise money or go public via the IPO process. This function serves the primary market or “new capital”.
Mergers & Acquisitions (M&A) – Advisory roles for both buyers and sellers of businesses, managing the M&A process start to finish.
Sales & Trading – Matching up buyers and sellers of securities in the secondary market. Sales and trading group act as agents for clients and also can trade the firm’s own capital.
Equity Research –The equity research group conducts analysis and coverage of various securities to aid investors in making informed investment decisions and to facilitate the trading of stocks.
Asset Management – This involves the management of investments for a diverse array of investors, encompassing institutions and individuals, and employing a broad spectrum of investment styles.