concept of investment banks

8/10/2019 Concept of Investment Banks

1/14

Concept of Investment Banks

The banking scenario in India is itself huge, covering the different facets of the economy. By and large, investment

banks in India are itself an institution which generates funds in two different ways. The first manner in which it works

is by drawing public funds via the capital market by way of selling stock in their company. The other way in which itoperates is to seek for venture capital or private equity, as a substitute for a stake in their company.

Role of an Investment Bank

The major work of investment banks includes a lot of consulting. For instance, they offer advices on mergers and

acquisitions to companies. The other arena where they give advice are tracking the market and determining when

should a company come out with a public offering and what is the best possible way to manage the public assets of

businesses. The role that an investment bank plays sometimes gets overlapped with that of a private brokerage

house. The usual advice of buying and selling is also given by investment banks.

There is no demarcating line between the investment banking and other forms of banking in India. This has been

observed majorly of late. ll banks nowadays want to provide their customers the best of services and create a niche

for themselves and that is why apart from investment banks, all other banks too are aiming at making it big.

t the macro level, investment banking is related with the primary function of assisting the capital market in its

function of capital intermediation, i.e., the movement of financial resources from those who have them !the investors",

to those who need to make use of them for producing #$% !the issuers". &ver the decades, investment banks have

always suited the needs of the finance community and thus become one of the most vibrant and e'citing segment of

financial services.

#lobally investment banks handle significant fund(based business of their own in the capital market along with their

non(fund service portfolio which is offered to the clients. ll these activities are broadly segmented across three

platforms ( equity market activity, debt market activity and merger and acquisitions !)*" activity. In addition, given

the structure of the market, there is also a segmentation based on whether a particular investment bank belongs to a

banking parent or is a stand(alone pure investment bank.

Investmentbanks in India are challenging type of organization that support capital wants

of a business venture. Executing personal post, submitting bond, performance as a go-

between and supplementary merger and acquisition are some of the signicant features of

Investment banking in India.

!op "# Investment $anks in Indiao%ers large number of nancial optional services by

tracking the economic trends, besides as long as nancial help to corporate and retail

customers. &ome of them are'-

" ( $a)a) *apital
http://www.jpinvestment.co.cc/http://www.jpinvestment.co.cc/http://www.jpinvestment.co.cc/http://www.jpinvestment.co.cc/


2/14

!he $a)a) *apital +roup is one of the famous Investmentconsultant and inancial lanning

rms in India. It is expert under the group I of erchant $ankers by &E$I.$a)a) *apital

provides specially made iscal lanning facilities and investment consultation to the

investors, organizational investors, corporate, high income patrons and /on-0esident Indians

1/0Is2.

$eing one of the biggest distributors of economic goods, $a)a) capital provides an wide

range of investment schemes such as universal insurance, life insurance, mutual funds,

etc to both public and personal institutions.

3- icici securities ltd.

I*I*I &ecurities 4td is India5s chief equity house, I*I*I &ecurities 4td o%er back-to-back

banking solutions through its wide sharing network to canter to the varied needs of its retail

and corporate clients. !he rm is listed under the nancial power of &ingapore 1&2 and

inancial &ervices power, 67 and has an reliable place in the core divisions of its functional

areas such as consultant services, scal good sharing, Equity *apital arkets optional&ervices, etc.

8- I9*

I9* is initiated in "::; in *hennai< I9* undertake the liability of as long as nancial

support to 883 pro)ects accruing a earnings of up to 0s 3, 3#, =## million. !he sectors under

I9*5s nancial support be infrastructure, agric related business, transportation, healthcare,

tourism and others.

= ( 7otak ahindra capital corporation

7otak ahindra *apital corporation is inventor and leader in equity capital markets, 7otak

Investment $anking has undertaken the developmental work of most ground breaking

advances in the Indian capital markets comprising the launch of book building and capable

Institutional lacements in India. !he investmentbank has an impressive path record of

devious a range of sectors and has played a ma)or position in the government5s marker

disinvestments.

>- &$I *apital arkets

&$I *apital arkets is India5s leading investmentbank and system consultant, aiding local

rms in capital recruitment activities for last many years. !he rm started it operations in

":?@ and is a completely owned secondary of the &tate $ank of India. Asian growth $ank

1A+$2 possesses "8.?=B stakes in equity segment of &$I*A&.

@- !ata investment corporation ltd.


3/14

A non-banking nancial company 1/$*2, !I*4 is scheduled with the 0eserve $ank of India

under the group of 5Investment *ompany5. !he rm5s commercial behavior constitute

mostly of endow in ancient investmentsin equity of the rms in a variety of sectors. !he

chief source of go back for the rm entails income on investment trading and income

accrued on dividend.

;- Avendus capital

An investmentbank as long as mergers and acquisitions, xed returns, controlled nance,

intended optional facilities and rivate Equity &yndication to its customers ranging from

investors to corporate. !he bank has a powerful investigate capability which it utilizes to

close business deals in antagonistic situation. It presently concentrate on sectors where

Indian rms have planned growth benet that is Cealthcare, harmaceuticals, I! &ervices,

*onsumer goods, manufacturing, etc.

? ( 6!I securities 4td.

6!I &ecurities 4td authorized as a self-governing specialized body in "::=, 6!I &ecurities

4td., is one of the famous investmentbank of India. After the annihilation of 6nit !rust of

India 16!I2 Act, the total share fund of 6!I&E4 is now controlled by manager of particular

enterprise of 6!I. !he rm has been contribution all sorts of investment linked behavior

which incorporate investmentbanking and commercial consultation services.

:- yes bank

!his Investment banking friendship is busy in the categorization, understanding and

execution of deals for their clients in diverse sectors and nations. &ome of the typical

dealings incorporate divestitures, condential equity syndication, mergers D acquisition andI discussion.

"# ( cholamandalam investment D nance ltd.

A combined economic service supplier of three rms namely *holamandalam 9$& inance

4imited 1*942, 9$& *holamandalam 9istribution 4imited and 9$& *holamandalam

&ecurities 4imited, *holamandalam 9$& operates in "@ international markets. 9$& provides

a general range of services to small and medium sized venture, corporate, customers and

comprehensive banking behavior crossways center East and Asia.

INVESTMENT BANKING IN INDIA


4/14

An Investment Banker is total solutions provider as

far as any corporate, desirous of mobilising capital, is

concerned. The services range from investment

research to investor service on the one side and from

preparation of offer documents to legal compliances

and post issue monitoring on the other. There exists

a long lasting relationship between the Issuer

Company and the Investment Banker. A !erchant

Banker could be defined as An organisation that

acts as an intermediary between the issuers and the

ultimate purchasers of securities in the primary

security market

!erchant Banker has been defined under the

"ecurities # $xchange Board of India %!erchant

Bankers& 'ules, ())* as any person who is

engaged in the business of issue management either

by making arrangements regarding selling, buying or

subscribing to securities as manager, consultant,

advisor or rendering corporate advisory service in

relation to such issue management.

!erchant Banking, as a commercial activity, took

shape in India through the management of +ublic

Issues of capital and oan "yndication. It was

originated in ()-) with the setting up of the

!erchant Banking ivision by A/0 1rindlays Bank.

The main service offered at that time to the

corporate enterprises by the merchant banks

included the management of public issues and some

aspects of financial consultancy. The early and mid2

seventies witnessed a boom in the growth ofmerchant banking organisations in the country with

various commercial banks, financial institutions,

broker3s firms entering into the field of merchant

banking.

Issues +ead )anaged by arvy In the

last - ears

The /redentials

!anagement of Capital Issues

!anagement of Buybacks and

takeovers

+rivate +lacements of debt and

4uery

!ergers and Amalgamations

oan "yndication

#lossary of ey Terms
http://www.karvy.com/corporatefin/mbd.htmhttp://www.karvy.com/corporatefin/mbd.htmhttp://www.karvy.com/corporatefin/mbdTheCredentials.htmhttp://www.karvy.com/corporatefin/capissuesmgmt.htmhttp://www.karvy.com/corporatefin/buybackmgmt.htmhttp://www.karvy.com/corporatefin/buybackmgmt.htmhttp://www.karvy.com/corporatefin/privplace.htmhttp://www.karvy.com/corporatefin/privplace.htmhttp://www.karvy.com/corporatefin/manda.htmhttp://www.karvy.com/corporatefin/loansynd.htmhttp://www.karvy.com/ipo/glossary.htmhttp://www.karvy.com/corporatefin/mbd.htmhttp://www.karvy.com/corporatefin/mbd.htmhttp://www.karvy.com/corporatefin/mbdTheCredentials.htmhttp://www.karvy.com/corporatefin/capissuesmgmt.htmhttp://www.karvy.com/corporatefin/buybackmgmt.htmhttp://www.karvy.com/corporatefin/buybackmgmt.htmhttp://www.karvy.com/corporatefin/privplace.htmhttp://www.karvy.com/corporatefin/privplace.htmhttp://www.karvy.com/corporatefin/manda.htmhttp://www.karvy.com/corporatefin/loansynd.htmhttp://www.karvy.com/ipo/glossary.htm


5/14

'eform measures were initiated in the capital market from ())*, starting with the

conferring of statutory powers on the "ecurities and $xchange Board of India %"$BI& and

the repeal of Capital Issues Control Act and the abolition of the office of the Controller of

Capital Issues. These have brought about significant improvement in the functional and

regulatory efficiency of the market, enabling the !erchant Bankers shoulder greater legal

and moral responsibility towards the investing public.

KARVY AS AN INVESTMENT BANKER

5arvy is well networked with *66 full2fledged branches and 786 Investor "ervice Centers

with a workforce of over 7866 personnel drawn from various disciplines.

5arvy Investor "ervices imited, a "$BI registered !erchant Banker is a (669 subsidiary

of 5arvy Consultants imited and is among the top (6 merchant Bankers in India today.

The parent Company i.e. 5arvy Consultants imited was founded by a group of

professionals in ():* and today it has evolved as integrated financial services company of

repute, offering various financial services to suit every re4uirement;need of our

customers. By virtue of its access to millions of Indian "hareholders, in addition to

companies, banks and financial institutions, 5arvy has in the process built up a positivereputation with regulatory authorities and other government agencies. 6 public;rights issues as !erchant Bankers. uring

the last two years we have handled the share buyback issues of TT5 I1 imited, "irpur

+aper !ills imited, Bhagyanagar !etals imited, A ? Thomas 1roup2/elliampathy Tea and

+roduce Company imited, Chordia @ood +roducts imited, eritage @oods %India& imited,

Titanor Components td, +unab Communications imited, etc. to name a few.

=e have also handled;are handling the 'ights;+ublic issues of hanalakshmi Bank,handapani @inance, !oschip, 5arur ?ysya Bank, ux osiery Industries td, "ah

+etroleums imited, +aradyne Infotech imited, ash +apers imited, "+ Industries

imited, +rovogue %I& imited, Tulip IT "ervices imited, 1ati imited as lead managers to

name a few. =e have also been appointed as advisor to some of the 1


6/14

'$C, +@C, "IBI, etc.

As an Investment Banker, 5arvy providesD

E !anagement of Capital Issues

E !anagement of Buybacks, Takeovers and elisting offers

E +rivate +lacement of ebt and $4uity

E !ergers and Amalgamations

E oan "yndication

Source : Investment Banking Department

KARVY AS AN INVESTMENT BANKER

A""I1/!$/T" A/$ B 5A'?

PUBLIC ISSUES

S.No. Name of the Issuer Issue Sie

!Rs. I" #a$hs%

&ur Ro#e

( FC< Bank *G,666 Co2!anager

* ux osiery Industries td (,666 ead !anager

7 ?iaya Bank *6,666 Co2!anager

G 'amakrishna @orgings td (,(86 ead !anager


7/14

8 ?ishal $xports 66 ead !anager

- IBI @lexi Bonds (: >6,666 ead !anager

> IBI @lexi Bonds () -6,666 ead !anager

: IBI @lexi Bonds *6 :6,666 ead !anager

) IBI @lexi Bonds *( (,66,666 ead !anager

(6 ICICI August *667 -6,666 ead !anager

(( ICICI G: ead !anager

* The 5arur ?ysya Bank imited 7-66 ead !anager

7 Borax !orari imited ()- ead !anager

G !oschip "emiconductor Technology

td

((>6 ead !anager

8 Coonoor Tea $states Co td ead !anager


8/14

- Agro utch @oods imited ead !anager

TAKE(&VER ASSIGNMENTS

S.No. Name of the Issuer &ur Ro#e

( TT5 imited ead !anager

* Advanced !icronic evices td ead !anager

7 ?enkataramana otels td ead !anager

G Thiagaraar !ills imited ead !anager

8 =+I imited ; industhan Fdyog imited ead !anager

- 'aasi 'efractories td ead !anager

> industhan Fdyog td ead !anager

: 5erry Host $ngineering td ead !anager

) "tewarts and loyds of India td ead !anager

(6 '' 1reenhands td ead !anager

(( TT5 ealthcare td ead !anager

(* +hoenix !ills imited ead !anager

BUY(BACK &))ERS


( Titanor Components imited ead !anager

* +unab Communications td ead !anager


9/14

DELISTING &))ERS


( "pencer # Company td ead !anager

* "haradha Terry +roducts imited ead !anager

7 Idea "pace solutions td

G "'+ Tools imited

DEBT ISSUES

S.No. Name of the Issuer Issue Sie

!Rs. I" #a$hs%

&ur Ro#e

( A+ +ower @inance Corporation td 7),*>) Arranger

* A+ =ater 'esources evelopment

Corporation

8-,:67 Arranger

7 +unab "tate Industrial

evelopment Corporation

*6,666 Arranger

G imachal +radesh Industrial

evelopment Board

*6,666 Arranger

8 A+ +ower @inance Corporation td *8,666 Arranger

- hanalakshmi Bank imited *,666 Arranger

ES&S*ES&P


( +C" Technologies td !erchant Banker

* "uven ife "ciences td !erchant Banker


10/14

7 =ipro imited !erchant Banker

G +olaris "oftware Tech. td !erchant Banker

8 Aptech imited !erchant Banker

- C Technologies imited !erchant Banker

> 1ati imited !erchant Banker

: !atrix aboratories imited !erchant Banker

C&RP&RATE )INANCE ACTIVITIES

S.No. Name of the Com+a", Nature of Assi-"me"t

( Bharat otels imited ?aluation of Business

* ?erdant Technology td ?aluation 'eport

7


11/14

G !ars 'estaurants imited +ublic Issue

8 +aradyne Infotech imited +ublic Issue

- +lus +aper @oodproducts imited +ublic Issue

> Bartronics India imited +ublic Issue

: Tulip IT "ervices imited +ublic Issue

) "+ Industries imited +ublic Issue

(6 +rovogue India imited +ublic Issue

(( 'ohit @errotech imited +ublic Issue

(* ash +apers imited @urther +ublic Issue

(7 Beeyu +ower @inance Corporation Bonds Issue

(: "IBI Bonds Issue

() /B Bonds Issue

ISSUES IN PIPELINE

S# Name of the Com+a", Nature of Ma"ate


12/14

No

( $ssel "hyam Communications imited +ublic Issue

* /avayuga $ngineering Company imited +ublic Issue

7 +ioneer $mbroideries imited @urther +ublic Issue

G /C Industries imited 'ights Issue

8 Agro utch Industries imited 'ights Issue

Top;Back !B ome;5arvy ome

SEBI (Merchant Bankers) Regulations, 199

)erchant Bankers have been barred from undertaking activities other than related to the securities

market. The 01BI !)erchant Bankers" 2egulations, 3445 have been amended on $ecember 34,

3446 to provide that7

a. the applicant should be a fit and proper person8

b. a merchant banker has to seek separate registration for its underwriting or portfoliomanagement activities8

c. the categorisation of merchant bankers I, II, III and I9 has been dispensed with8

d. a merchant banker, other than a bank or a public financial institution, has been prohibitedfrom carrying any activities not pertaining to the securities market8 and

e. the applicant should be a body corporate other than non(banking finance company.

The )erchant Bankers 2egulations were amended on :anuary 53, 344; to provide time

upto :une -


13/14

securities market. The 2eserve Bank of India has e'empted merchant banking companies

from the provisions of 2eserve Bank of India ct, 34-= relating to compulsory registration

!section =>3", maintenance of liquid assets !section =>3B", creation of reserve fund

!section =>3/ " and all the provisions of the recent $irections relating to deposit acceptance

and prudential norms.

)erchant banking companies, to be eligible for the above e'emption, are required to satisfy

the following conditions7

i. such companies are registered with the 01BI under section 35 of the 01BI ct, 3445 and arecarrying on the business of merchant banker in accordance with the 2ules ? 2egulationsframed by the 01BI8

ii. they acquire securities only as part of their merchant banking business8

iii. they do not carry on any other financial activities as mentioned in section =>3 !c " of

the 2BI ct, 34-=8

iv. they do not accept ? hold public deposits.

Nee for Re-istratio"

"$BI "tarted the process of registration of some of the intermediaries associated with the process of

issue management. This is done to ensure professionaliation of intermediaries and to curb the

malpractices indulged in by some of intermediaries.

The merchant banks have to be registered with "$BI and no firm can carry on any activity as a

!erchant banker, unless it holds a certificate granted by the board under the regulation of "$BI. The

investment banks serves as an intermediaries between issuing company and investing clients.

=hen investment banks serve as the lead managers for the securities of a client, it is necessary that

they themselves are credible in order to gain the investor confidence.

The registration procedure serve this purpose. By setting out certain eligibility criteria for the purpose

of registration, the regulatory bodies seek to ensure that the investment banks, which handle the

various needs of the clients, have the re4uired infrastructure and resources to do so.

$ligibility Criteria

"$BI has prescribed certain criteria in order to be register as merchant banks. These criteria are

included in "ecurities and $xchange Board of India %!erchant Bankers& 'ules, ())*.

To be eligible to carry out activities of merchant banker, the applicant must be a body corporate other

than a /on Banking @inance Company. The applicant himself must be a 4ualified professional in

finance, law or business management from an institute recognied by the 1overnment, the applicant

also must employ two competent persons to carry out the dealings of a merchant banker.


14/14

The applicant, his director, partner or principal officer must not have been involved in any lawsuit

associated with the securities market and they also must not have been convicted at any time for any

offence involving moral turpitude.

"$BI has also set out the capital ade4uacy re4uirement to the persons waiting to be registered as

merchant bankers. The applicant must have a minimum /et worth of 's. 8 Crore. The maximum

underwriting exposure for an investment bank should not exceed *6 times its total net worth. If theindustry practice is to keep an exposure of around (8 times the net worth, it would be termed as the

JIndustry Capital Ade4uacy 'e4uirementK as against regulatory suggestions.

In the term of regulations, the firms must meet the capital ade4uacy in both the countries from where

the capital flows out as well as where it flows in. The procedure for registration must be followed and

the relevant forms should be submitted by the merchant bankers.

concept of investment banks

Documents