Investment Banking – 2 Main Types to Know About

Investment banks help private as well as public companies and organizations to gathers funds in both debt and equity capital markets. These banks were originally founded in order to raise capital and provide guidance on corporate financial strategies, such as acquisitions and mergers. Investment banks assume many different roles such as handing safety issues, providing institutional and public investors with brokerage services, providing corporate clients with financial advice, offering guidance on acquisition deals and mergers and more. These days, you can also find investment banks to have ventured into bridge financing, foreign currency exchange and private banking. Know about the two main types of investment banking companies India.

Basic Investment Bank

This kind of investment bank tends to issue bonds and stocks to customers for a predetermined sum. Then the bank invests this sum which has been used by the client for buying bonds and stocks. Such types of investments vary across different banks. In the nations where this type of investment is permitted, investment banks come with networks of lending and financial organizations that they can derive profit from. Other banks also make investments in construction and property development. Customers with bonds and stocks would tend get payments from the amount of profit that is made on the sum that they have invested for a particular time period.

Both the investment bank and the client derive profits from the sum initially invested by the client. As these types of banks are completely familiar with the trade methods, they are often consulted about corporate investment activities like acquisitions and mergers by both big and small corporations and business houses.

Merchant Investment Bank

This is the other kind of investment bank. Such kinds of banks participate in trade financing and provide business ventures with capita in the form of shares and not loans. These banks have their businesses based on how secure shares are. Such types of institutions only fund those business ventures which have only started in the world of business. Generally, startup merchant companies do not get any financing. Merchant banks can be regarded only as investment banks which are ready to invest some amount of the capital of the organization. The money is put in the form of an equity investment. The company acts like research and advisory firms in India into the transaction and offers advice. In case you want trade financing, you will like to get in touch with a merchant bank rather than an investment bank.

The primary function of these banks consists of offering financial services and advice to individuals as well as corporate houses. Such kinds of banks function like a type of intermediary between the consumers of the securities and the issuers of the capital. Various companies issue these kinds of securities in order to gather funds in the stock markets. Merchant banks offer better monetary solutions and options to the customers, and can assist customers to gather money via low-cost resources. These banks are able to revive the economic health of sick firms.