Define the term- origination, Finance Basics

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Define the term- Origination

Origination offers to the work of investigation, analysis and processing of new project proposals. Origination starts before an issue is really floated in the market. There are 2 aspects in these functions:

(i) Technical, Economic and Financial Analysis: A careful study of technical, economic and financial viability to ensure soundness of the project. This is a primary investigation undertaken by the sponsors of the issue.

(ii) Advisory Services: Advisory services that improve the quality of capital issues and ensure its success. Advisor services include:

Ø Type of issue

Ø Magnitude of issue

Ø Time of floating an issue

Ø Pricing of an issue- whether shares are to be issue at par or at premium

Ø Methods of issue.

Ø Technique of selling securities

Function of origination is carried out by merchant banker, who may be commercial banks and financial institutions, or private firms.

 


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