Investment banking is a stream of banking that primarily focuses on capital financing for global and local businesses, individuals and even governments and other entities. Investment banks are best known for their work as financial mediator. Its role begins with pre-underwriting urges and sustained after the distribution of securities in the form of advice.
It is the division of a bank or financial institution that serves governments, corporations, reorganizations and broker trades for both institutions and private investors, aid in the sale of securities, and facilitate mergers and acquisitions advisory services, by providing underwrite new debt and equity securities. They are generally involved where huge amount of money moving happens. It also provides guidance to issuers regarding the issue and placement of stock.
Investment bankers manage financial aspects of large projects and help governments, corporations and other groups plan. They primarily help clients raise money through dues and equitableness offerings. it includes raising capital through Initial Public Offerings, selling shares to investors through private placements, credit facilities with the bank, or issuing and selling bonds on behalf of the client.
The investment banker plays crucial role in arranging equity financing and would put together a brochure with the terms of the offering and the risks it carries, help price the offering and manage the issuance process. The shares priced should be just right. If they are priced too high or too low the public may not be interested in buying them.
All investment banking activity is categorized as either the buy side or the sell side. The sell side involves trading securities typically refers to Initial Public Offerings, market making services, helping clients facilitate transactions, placing new bond issues. The buy side assists Private equity funds, hedge funds, unit trusts, mutual funds and investing public to help them boost their returns when investing or trading in securities such as stocks and bonds.