What exactly is Merchant Banking?
Unlike commercial banks, which serve the needs of the average person, merchant banks serve the needs of corporate firms.
Merchant banking is the provision of advice and services to corporations for a fee, which can assist an entrepreneur in starting a new venture, raising capital, expanding and modernizing an existing business, restructuring a business, or assisting companies in registering, buying, and selling assets (shares) on a stock exchange.
What exactly is Merchant Banking Services?
Project Management: Merchant bankers prepare project reports to analyze financing patterns in order to evaluate project costs and appraise them with financial institutions.
Management of Debt and Equity provides: Assisting companies in raising funds from investors is one of the main functions of a merchant banker in India. The primary services provided are,
• Product design • Pricing • Document registration • Support assurance • Allocation and refund • Stock exchange listing management
Management of Issues: These bankers play an important role in the management of issues, which involves the marketing to the public of corporate securities such as equity shares, preference shares, and bonds.
Merchant banks act as a go-between, facilitating the transfer of capital from investors to their clients. A merchant banker in India, according to SEBI guidelines, organizes meetings between company representatives and agents to settle arrangements related to prospectus registration, launching advertising campaigns, and scheduling board meetings to pass necessary resolutions. These bankers also advise companies on issue pricing. Merchant bankers also provide public issue underwriting (up to 15%).
Client Portfolio Management: Managing a diverse range of securities such as shares and bonds issued by various companies in order to maximize return while minimizing risk.
Placement and distribution: These bankers help with the allocation and distribution of securities via the merchant banks' institutional and retail networks.
Corporate Restructuring: These bankers act as middlemen in negotiations between two companies, assisting client management with various restructure activities such as mergers and acquisitions, divestitures, management buyouts, joint ventures, and more.
Offshore Funding: Merchant bankers assist their clients in managing joint ventures, foreign currency investments, and international collaboration agreements.
Syndication of Loans: Merchant bankers help clients obtain term loans for projects from a single development finance institution, a syndicate, or a consortium.
Corporate Counselling and Advisory Services: Corporate counselling refers to a comprehensive package of all merchant banking services, including project counseling, restructuring, issue management, loan syndication, and so on. Merchant bankers also provide their corporate clients with customized solutions to financial problems, as well as attempts to refinance alternatives and evaluate cheaper sources of funds.
However, it should be noted that in order to act as a merchant banker or firm in India, one must have the required certificate from SEBI, the Securities and Exchange Board of India."""