Investment banker, Financial Management

The Role of Merchant Banker

The issuer appoints the Merchant Banker (or Investment Banker) to undertake the issue activity. A Merchant Banker performs multiple functions during the preliminary issue of security. He advises and advocates the issuing firm regarding the regulations for equity issue. He also decides the timing and pricing of the issue so that the issue gets fully subscribed.

The Investment Banker performs the underwriting function for an issue and is specifically called as Underwriter to the Issue. The Investment Banker guarantees a fixed amount to the issuer in exchange of its securities for which it pays an underwriting fee. The issue is underwritten depending on the reputation of the issuer and the environment for new issues in the market. In underwriting, the investment banker runs the risk of undersubscription of issue and has the obligation to purchase the unsubscribed portion as guaranteed in the underwriting issue. So he is careful in selecting the issuer for underwriting and sometimes underwrites the issue in a syndication of Investment Bankers to reduce the risk and also discourage firms with low public image.

The Merchant Banker also performs activities like drafting and design of Offer Documents, Prospectus, statutory advertisements and marketing campaigns, and the memorandum containing salient features of the Prospectus. He also ensures that the issuer complies with stipulated requirements and completes the prescribed formalities with the Stock Exchanges, Registrar of Companies, and the SEBI including finalization of Prospectus and filing. He also performs the activity of distributing the shares through marketing channels.

 

Posted Date: 9/10/2012 5:14:53 AM | Location : United States







Related Discussions:- Investment banker, Assignment Help, Ask Question on Investment banker, Get Answer, Expert's Help, Investment banker Discussions

Write discussion on Investment banker
Your posts are moderated
Related Questions
REPORT To: The Directors of Leaminger plc From: A business advisor Date: December 2002 Subject: Acquiring the turbine machine Introduction In financial

Working capital cycle in a manufacturing business Average time raw materials are in stock (raw materials/purchases x 365 days)   Plus   Time

TYPES OF DIVIDEND POLICY 1. Regular dividend policy: Payment of dividend at standard rate is known as regular dividend policy. 2. Stable dividend policy: Payment of fix

Explain about the Interest payments Debenture interest is generally paid semi-annually however annual payments aren't uncommon.  Usually there are registered debentures on whic

Characteristics of Warrants As mentioned earlier, a warrant is a variant of a call option and gives the holder a certain right to purchase shares of the company at a predetermi

1. UN Number is a four digit number assigned to a potentially hazardous material (such as gasoline) or class of materials like corrosive liquids. 2. UN Numbers are assigned by U

Uses of Index Numbers 1. Establishes trends Index numbers when analyzed reveal a general trend of the phenomenon under study. The available figures for inflation based

Market risk as that portion of total variability of return caused by the alternating Forces of bull and bear markets. When the security index moves upward haltingly for a signifi

These funds represent borrowings made for a period of one day to upto a fortnight. However, the mechanism adopted to lend funds to the call and the notice money m

Explain the Competitive Benchmarking Healthcare services or Hospital are compared to rival 'competition 'in the same industry for instance methods of patient care and levels o