Investment banking diverges from commercial banking in a sense that their main clients are private and public corporations. One can generate substantial wealth through prudent investment of the available resources using this banking system. If you are running a company or a public corporation, you can also use investment banking to assist with the different business transactions that you might be involved in.
Marc Leder LinkedIn is the Co-Chief Executive Officer of Sun Capital Partners, Inc. and for more than 25 years, he has been engaged in investment banking. He is a member of the Board of the Museum Berggruen in Berlin.
Objectives and Functions of Investment Banking:
- The primary aim of this banking system is to help private and public corporations raise funds in the capital market.
- The Investment banks also guide and provide strategic advisory services to private and public corporations in a diverse range of financial transactions, including acquisitions, mergers etc.
- Investment banking performs various other functions as well, other than these two above mentioned main functions. For example, brokerage services to institutional and public investors are offered by the investment banks.
- One of the vital areas is security issues, where the corporate bodies find advises related to finance of Investment banking very valuable. They also act as a financial adviser for their various corporate clients.
- In various merger and acquisition deals, corporate bodies seek advice from investment banks.
- To perform various financial security researches for corporate clients and individual investors, investment banks are also considered as experts.
- Bridge financing and foreign currency exchange also comes under their work profile.
Public and Private Corporations are Helped by Investment Banking to Raise Funds:
There are two methods that are used by the investment banks to help corporations and companies raise funds in the capital market. The investment banks can either raise funds through private placements or through the capital market. The investment banking companies have two options to decide on when it comes to raising funds in the capital market. The banks can either raise funds by secondary offering or by selling the equities of the company in the stock market in an IPO or initial public offering. Another alternative is to offer advices related finances to the firms and companies in order to help them with various issues related to debt.
According to Marc Leder, there is always the opportunity to meet and interact with senior people as an investment banker. This is an excellent opportunity to better comprehend how top people in a given industry operate and think and along the career path, it can also present opportunities at many stages. There may also be interaction with senior government officials on top of private sector contacts, especially in developed countries where a high level of investment in an industry is maintained by the state. All these important connections can prove beneficial in the long run.
On the whole, investment banking has emerged as a great helping hand for businesses and companies as they have the potential to aid your business develop and grow in a certain way that will in due course give you a winning edge over your competitors.
