What role does investment banking play for the clients?

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What role does investment banking play for the
clients?
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The concept of investment banking
Some of the other time in our life, we must have
heard of the term, investment banking. It could
have been on news channels, while browsing the
internet or simply while you were at your bank or
so. But what exactly is investment banking in
real sense? Now, an investment bank is a part of
the financial system that is hired mostly by
giant and high-end firms for their financial
advisory services. An investment bank performs
various duties, such as being the mediator and
over-seeing mergers and acquisitions. Bringing in
together the suppliers and long-term fund users
in the capital market.
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Underwriting
In underwriting, investment banks package and
sell securities on behalf of their clients. It is
also a process in which, the lender of a lending
institute scrutinizes the credit worthiness of
the customer and delivers the same to the said
authorities. When the investment banker sells the
securities on behalf of their clients, they are
said to first buy them at lower price and then
sell at higher. Therefore, underwriting becomes
an assurance in which the banker says to bear the
risk in case of any adverse fluctuation in price
at the time of distribution.
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Distribution
In this function, the investment banks market the
issuance of new securities. Once they acquire
these new securities, it becomes their
responsibility to make it a part of the
investors hands. Also, because they specialize
with the staff and organization in distributing
the securities, they also do physical
distribution in a much more efficient manner.
This, in fact, is more economical than an
individual company.
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Being an advisor
For any company to climb up the ladder of their
wealth and financial strength they need to hire
the right financial advisory services as well.
These firms advise them on investment in mutual
funds, dealing with hedge funds, long-short and
long-only funds, real estate, shares, bonds, gold
and other property as well. The investment bank
does this by first studying, in detail, the
current financial portfolio of the client and
then chalking out a path to help them.
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Building a market for the client
When a company, a big firm decides to go public,
it is the duty and also obligation of the
investment banker to make and build market for
his client. This is to be done for the shares
after they have been issues. They make a market
and see to it that it remains liquid. The
investment banker also bears the responsibility
to maintain inventory, stocks, quotations of bids
and be all ready to sell or buy at the prices
that have been locked.
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Thank You
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