Understanding Investment Banking

Investing Banking Business is divided into two parts:

1. Selling Part: Under this Investment Banks analyze the financial market, promote and sell the debt and equity securities on behalf of their clients with a motive to arrange funds for their projects.
2. Buying Part: Investment Banks buy the securities on a large scale for investing in Mutual Funds, Hedge Funds, Pension Funds, and Insurances for money management.

Investment Banks are financial institution that deals in massive and complex financial transactions. These banks are separate from Commercial Banks on the ground that Investment Banks don’t accept public deposits but rather works with a major objective to help their clients to raise capital for their project. These banks hire financial experts as Investment Bankers. Investment Bankers have a complete knowledge of the current economic affairs of the world so, they can make correct and appropriate recommendations to their clients about investments and other financial activities. Investment banking is a highly competitive business that requires expertise in finance, economic affairs, and business strategy.

Some of the World Wide Popular Investment Banks are:

Goldman Sachs, Morgan Stanley, Evercore, J.P. Morgan, Bank of America Corp., Citi Institutional Clients Group, and many more.

In India we have Investment Banks namely:

Axis Bank Ltd., HDFC Bank Ltd., ICICI Securities Ltd, Central Bank of India, IDBI Capital Market Services Ltd., etc.

Investment Banking in a common language can be understood as a part of a Banking System specialized in raising funds for an Organisation (or Individuals), Governments, and other entities along with providing financial aid in important decision-making like Mergers, Acquisitions, Diversification, and Reorganisation. Investment Banking also includes activities like initiating Initial Public Offering (IPO), Underwritings of new securities, guidance in the placement of stocks, conducting financial research, and so on. 

Every business plan needs a monetary investment and financial management for its execution. However, the owner and his team can arrange and manage finance for a small-scale business, but large-scale Start-Ups and well-established Corporate-Units (both Public and Private) require huge finance to run their business. The primary concern of big units is the Investment and Management of the massive Finance of these units. At this point, a concept of Investment Banking pop-ups as a solution to all the financial problems of big enterprises.