Merchant Banking

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METHODOLOGY


Quantitative aspect:Primarily various books on merchant banking were read to know

various features and principle used in working of the industry. Moreover, various magazines were read to know about the latest happening in this field. Websites were visited and information regarding different aspect, to get a better knowledge on the topic was collected. Various websites were visited so as to study the important of merchant banking in the ever rising competition in today’s world.



Qualitative aspect:MR. NAVNEET (Anand rathi) was approached and interviewed, and

implementation and scope of merchant banking was understood through his expertise in the field. Some analysis was done for different cases so as to understand different strategies in different situation, MR. Kotiyal (share khan) was also approached to give an insight on the future of merchant banking in India and the current scenario

EXECUTIVE SUMMARY
Merchant banking an overview:Company raises capital by issuing securities in market. Merchant bankers at as intermediaries between the issuer of capital and the ultimate investor who purchase these securities. Merchant banking……. is the financial intermediation that matches the entities that need capital and those that have capital? It is function that facilitates the flow of capital in the market.

Scope of merchant banking activities:Merchant banking activities helps: • • • In channel sing the financial surplus of the general public into productive investment avenues. To coordinate the activities of various intermediaries to the share issue such the registrar, banker, advertising agency, printers, underwriters, brokers etc. To ensure the compliance with rules and registration governing the securities market.

Functions of a merchant banker…..
The following comprise the main functions of a merchant banker: 1.

Management of debt and equity offerings:This forms the main function of the merchant banker. He assists the companies in raising funds from the market. The main areas of work in this regard includes : instrument designing, pricing the issue, registration exchanges. of the offer document, underwriting support, and marketing of the issue, allotment and refund, listing on stock

2.

Placement and distribution:the merchant banker helps in distributing various securities like equity shares ,debt instrument, mutual fund product, fixed deposit, insurance products, commercial paper to name a few. The distribution network of the merchant banker can be classified as institutional and retail in nature. the institutional network consist of mutual fund, foreign institutional investor, private equity funds, pension fund, financial institution etc. the size of such a network represents the wholesale reach of the merchant banker. The retail network depends on networking with investors.

3.

Corporate advisory services:Merchant bankers offer customized solutions to their client’s financial problems. The following are the main areas in which their advice is sought.

4.

Financial structuring:-

Includes determining the debt-equity ratio and gearing ratio for the client: the appropriate capital structure theory is also framed. Merchant banker also explores the refinancing alternatives of the client and evaluate cheaper source of fund. Another area of advice is habilitation and turnaround management. In case of sick units, merchant banker may design a revival package in coordination with banks and financial institution. Risk management is another area where advice from a merchant banker is sought. He advice the client on different hedging strategies and suggest the appropriate strategy.

5.

Project advisory service:Merchant banker help their clients in various stage of project undertaken by the clients. They assist them in conceptualizing the project idea in the initial stage. Once the idea is formed, they conduct feasibility studies to examine the viability of the proposed...
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