• June 23, 2022

investment banking

Investment banks, unlike commercial banks, help public and private corporations raise funds in the Capital Markets (both equity and debt), as well as provide strategic advisory services for mergers, acquisitions and other types of financial transactions.

In fact, the original purpose of an investment bank was to raise capital and advise on mergers and acquisitions and other corporate financial strategies. As banking firms have diversified, investment banks have come to fulfill a variety of functions, including underwriting and distributing new securities issues, offering brokerage services to public and institutional investors, providing financial advice to corporate clients, especially on security matters, providing advice on merger and acquisition deals, providing financial security research to investors and corporate clients, etc. Investment banks have also moved into foreign exchange, private banking and bridge financing.

A key function of investment banks is to advise companies to raise money or funds. There are two ways of raising funds that investment bankers typically engage in: raising funds through the capital markets and raising funds through private placements. Investment bankers can raise funds in the capital markets in two ways. They may sell the company’s shares on the stock market in an initial public offering (IPO) or secondary offering, or they may advise companies on debt issuances. Investment bankers also advise companies on private placements, which means the purchase or sale of corporate securities by private companies or individuals. Types of private placement transactions include venture capital investments, strategic business investments, private equity investments, private debt placements, acquisitions, divestitures, and commercial banking.

Investment banks possess an extensive network of financial and industry contacts, current market knowledge, legal processes, and comparable market events that will cause their clients to create an advantage over their competitors. Some of the world’s leading public and private investment banks include ABN Amro, Banc of America Securities, Barclays Capital, Bear Stearns, BNP Paribas, Brown Brothers Harriman, and Calyon.

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