Merchant banks perform a range of activities to help clients achieve their financial goals. Some of the main activities of merchant banks are:
- Underwriting: Merchant banks act as underwriters for various securities issuances, including IPOs, rights issues, and bond issuances. Underwriting involves assuming the risk of buying unsold securities from the issuer and reselling them to investors.
- Private placements: Merchant banks also help clients raise capital through private placements of securities. This involves selling securities to a select group of investors, rather than making a public offering.
- Mergers and acquisitions: Merchant banks advise clients on mergers and acquisitions, including valuations, negotiation, and structuring of deals.
- Loan syndication: Merchant banks help clients raise debt capital by arranging loans from a group of lenders. This is known as loan syndication.
- Corporate restructuring: Merchant banks assist clients in restructuring their operations, including mergers, acquisitions, divestitures, and spin-offs.
- Asset management: Merchant banks offer a range of asset management services, including portfolio management, mutual fund management, and pension fund management.
- Project finance: Merchant banks help clients raise capital for large infrastructure and other projects by structuring project finance deals.
- Risk management: Merchant banks provide clients with risk management services, including hedging against foreign exchange and interest rate risks.
- Advisory services: Merchant banks offer advisory services on a range of financial matters, including capital raising, strategic planning, and corporate finance.
The specific activities offered by merchant banks can vary depending on the regulations and market conditions in a particular country. In general, merchant banks play an important role in providing financial services to corporate clients and investors.