Merchant Banking

Key Highlights

• Merchant banking is a term for specialized financial services offered to businesses, big companies, and wealthy individuals.

• Key functions includes fundraising, advisory services, loan syndication, portfolio management and underwriting.

What is Merchant Banking?

Merchant banking is a term for specialized financial services offered to businesses, big companies, and wealthy individuals. Unlike regular banks, merchant banks focus on big-ticket financial deals, helping clients raise money, plan smart business moves, or manage investments.

Key Functions

• Fundraising: They help companies get funds through things like public share offerings, private investments, or rights issues.

• Advisory Services: They guide businesses on big decisions like mergers, acquisitions, or restructuring.

• Loan Syndication: They organize loans from multiple banks for companies needing large sums.

• Portfolio Management: They handle investment portfolios for companies and rich clients.

• Underwriting: They ensure new stocks or bonds issued by companies get sold.

Regulatory Framework

In India, the Securities and Exchange Board of India (SEBI) oversees merchant banking, setting rules for how they manage deals and advise companies. Globally, merchant banks follow strict local regulations to ensure everything is above board.

Advantages of Merchant Banking

• Easier Fundraising: They make raising large amounts of money smoother and faster.

• Lower Risks: They help spread out financial risks through smart planning and diversified investments.

• Grow Your Business: They support big moves like mergers or expansions to help businesses thrive.