Concept of Investment Banks

The banking scenario in India is itself huge, covering the different facets of the economy. By and large, investment
banks in India are itself an institution which generates funds in two different ways. The first manner in which it works
is by drawing public funds via the capital market by way of selling stock in their company. The other way in which it
operates is to seek for venture capital or private equity, as a substitute for a stake in their company.

Role of an Investment Bank

The major work of investment banks includes a lot of consulting. For instance, they offer advices on mergers and
acquisitions to companies. The other arena where they give advice are tracking the market and determining when
should a company come out with a public offering and what is the best possible way to manage the public assets of
businesses. The role that an investment bank plays sometimes gets overlapped with that of a private brokerage
house. The usual advice of buying and selling is also given by investment banks.
There is no demarcating line between the investment banking and other forms of banking in India. This has been
observed majorly of late. All banks nowadays want to provide their customers the best of services and create a niche
for themselves and that is why apart from investment banks, all other banks too are aiming at making it big.
At the macro level, investment banking is related with the primary function of assisting the capital market in its
function of capital intermediation, i.e., the movement of financial resources from those who have them (the investors),
to those who need to make use of them for producing GDP (the issuers). Over the decades, investment banks have
always suited the needs of the finance community and thus become one of the most vibrant and exciting segment of
financial
services.
Globally investment banks handle significant fund-based business of their own in the capital market along with their
non-fund service portfolio which is offered to the clients. All these activities are broadly segmented across three
platforms - equity market activity, debt market activity and merger and acquisitions (M&A) activity. In addition, given
the structure of the market, there is also a segmentation based on whether a particular investment bank belongs to a
banking parent or is a stand-alone pure investment bank.

Investment banks in India are challenging type of organization that support capital wants
of a business venture. Executing personal post, submitting bond, performance as a gobetween and supplementary merger and acquisition are some of the significant features of
Investment banking in India.
Top 10 Investment Banks in India offers large number of financial optional services by
tracking the economic trends, besides as long as financial help to corporate and retail
customers. Some of them are:-

1 Bajaj Capital

The Bajaj Capital Group is one of the famous Investment consultant and Financial Planning
firms in India. It is expert under the group I of Merchant Bankers by SEBI.Bajaj Capital
provides specially made Fiscal Planning facilities and investment consultation to the
investors, organizational investors, corporate, high income patrons and Non-Resident Indians
(NRIs).
Being one of the biggest distributors of economic goods, Bajaj capital provides an wide
range of investment schemes such as universal insurance, life insurance, mutual funds,
etc to both public and personal institutions.

2- icici securities ltd.

ICICI Securities Ltd is India's chief equity house, ICICI Securities Ltd offer back-to-back
banking solutions through its wide sharing network to canter to the varied needs of its retail
and corporate clients. The firm is listed under the financial power of Singapore (FPS) and
Financial Services power, UK and has an reliable place in the core divisions of its functional
areas such as consultant services, fiscal good sharing, Equity Capital Markets optional
Services, etc.

3- IDFC
IDFC is initiated in 1997 in Chennai; IDFC undertake the liability of as long as financial
support to 332 projects accruing a earnings of up to Rs 2, 20, 400 million. The sectors under
IDFC's financial support be infrastructure, agric related business, transportation, healthcare,
tourism and others.

4 Kotak Mahindra capital corporation

Kotak Mahindra Capital corporation is inventor and leader in equity capital markets, Kotak
Investment Banking has undertaken the developmental work of most ground breaking
advances in the Indian capital markets comprising the launch of book building and capable
Institutional Placements in India. The investment bank has an impressive path record of
devious a range of sectors and has played a major position in the government's marker
disinvestments.

5- SBI Capital Markets

SBI Capital Markets is India's leading investment bank and system consultant, aiding local
firms in capital recruitment activities for last many years. The firm started it operations in
1986 and is a completely owned secondary of the State Bank of India. Asian growth Bank
(AGB) possesses 13.84% stakes in equity segment of SBICAPS.
6- Tata investment corporation ltd.

A non-banking financial company (NBFC), TICL is scheduled with the Reserve Bank of India
under the group of 'Investment Company'. The firm's commercial behavior constitute
mostly of endow in ancient investments in equity of the firms in a variety of sectors. The
chief source of go back for the firm entails income on investment trading and income
accrued on dividend.
7- Avendus capital
An investment bank as long as mergers and acquisitions, fixed returns, controlled finance,
intended optional facilities and Private Equity Syndication to its customers ranging from
investors to corporate. The bank has a powerful investigate capability which it utilizes to
close business deals in antagonistic situation. It presently concentrate on sectors where
Indian firms have planned growth benefit that is Healthcare, Pharmaceuticals, IT Services,
Consumer goods, manufacturing, etc.
8 UTI securities Ltd.
UTI Securities Ltd authorized as a self-governing specialized body in 1994, UTI Securities
Ltd., is one of the famous investment bank of India. After the annihilation of Unit Trust of
India (UTI) Act, the total share fund of UTISEL is now controlled by manager of particular
enterprise of UTI. The firm has been contribution all sorts of investment linked behavior
which incorporate investment banking and commercial consultation services.
9- yes bank
This Investment banking friendship is busy in the categorization, understanding and
execution of deals for their clients in diverse sectors and nations. Some of the typical
dealings incorporate divestitures, confidential equity syndication, mergers & acquisition and
IPO discussion.

10 cholamandalam investment & finance ltd.

A combined economic service supplier of three firms namely Cholamandalam DBS Finance
Limited (CDFL), DBS Cholamandalam Distribution Limited and DBS Cholamandalam
Securities Limited, Cholamandalam DBS operates in 16 international markets. DBS provides
a general range of services to small and medium sized venture, corporate, customers and
comprehensive banking behavior crossways center East and Asia.

INVESTMENT BANKING IN INDIA

An Investment Banker is total solutions provider as

far as any corporate, desirous of mobilising capital, is
Issues Lead Managed by Karvy In the
concerned. The services range from investment
last 3 Years
research to investor service on the one side and from
The Credentials
preparation of offer documents to legal compliances
and post issue monitoring on the other. There exists
Management of Capital Issues
a long lasting relationship between the Issuer
Company and the Investment Banker. A "Merchant
Management of Buybacks and
Banker" could be defined as "An organisation that
acts as an intermediary between the issuers and the takeovers
ultimate purchasers of securities in the primary
security market"
Private Placements of debt and
query
Merchant Banker has been defined under the
Securities & Exchange Board of India (Merchant Mergers and Amalgamations
Bankers) Rules, 1992 as "any person who is
engaged in the business of issue management either Loan Syndication
by making arrangements regarding selling, buying or
subscribing to securities as manager, consultant, Glossary of Key Terms
advisor or rendering corporate advisory service in
relation to such issue management".
Merchant Banking, as a commercial activity, took
shape in India through the management of Public
Issues of capital and Loan Syndication. It was
originated in 1969 with the setting up of the
Merchant Banking Division by ANZ Grindlays Bank.
The main service offered at that time to the
corporate enterprises by
the merchant banks
included the management of public issues and some
aspects of financial consultancy. The early and midseventies witnessed a boom in the growth of
merchant banking organisations in the country with
various commercial banks, financial institutions,
broker's firms entering into the field of merchant
banking.

Reform measures were initiated in the capital market from 1992, starting with the
conferring of statutory powers on the Securities and Exchange Board of India (SEBI) and
the repeal of Capital Issues Control Act and the abolition of the office of the Controller of
Capital Issues. These have brought about significant improvement in the functional and
regulatory efficiency of the market, enabling the Merchant Bankers shoulder greater legal
and moral responsibility towards the investing public.

KARVY AS AN INVESTMENT BANKER

Karvy is well networked with 200 full-fledged branches and 350 Investor Service Centers
with a workforce of over 3500 personnel drawn from various disciplines.
Karvy Investor Services Limited, a SEBI registered Merchant Banker is a 100% subsidiary
of Karvy Consultants Limited and is among the top 10 merchant Bankers in India today.
The parent Company i.e. Karvy Consultants Limited was founded by a group of
professionals in 1982 and today it has evolved as integrated financial services company of
repute, offering various financial services to suit every requirement/need of our
customers. By virtue of its access to millions of Indian Shareholders, in addition to
companies, banks and financial institutions, Karvy has in the process built up a positive
reputation with regulatory authorities and other government agencies. Our emphasis on
the quality of the services, we offer, has been instrumental in helping us to attain the
leadership in the financial services sector.
We have a track record of handling 70 public/rights issues as Merchant Bankers. During
the last two years we have handled the share buyback issues of TTK LIG Limited, Sirpur
Paper Mills Limited, Bhagyanagar Metals Limited, A V Thomas Group-Nelliampathy Tea and
Produce Company Limited, Chordia Food Products Limited, Heritage Foods (India) Limited,
Titanor Components Ltd, Punjab Communications Limited, etc. to name a few.
We have also handled/are handling the Rights/Public issues of Dhanalakshmi Bank,
Dhandapani Finance, Moschip, Karur Vysya Bank, Lux Hosiery Industries Ltd, Sah
Petroleums Limited, Paradyne Infotech Limited, Yash Papers Limited, SPL Industries
Limited, Provogue (I) Limited, Tulip IT Services Limited, Gati Limited as lead managers to
name a few. We have also been appointed as advisor to some of the GOI disinvestments.
We have actively marketed bond issues of corporations from the States of Maharashtra,
Karnataka & Gujarat and debt issues of all the Financial Institutions like IDBI, ICICI, IFCI,

REC, PFC, SIDBI, etc.

As an Investment Banker, Karvy provides;
Management of Capital Issues
Management of Buybacks, Takeovers and Delisting offers
Private Placement of Debt and Equity
Mergers and Amalgamations
Loan Syndication

Source : Investment Banking Department

KARVY AS AN INVESTMENT BANKER

ASSIGNMENTS HANDLED BY KARVY
PUBLIC ISSUES
S.No.

Name of the Issuer

Issue Size

Our Role

(Rs. In lakhs)
1

UCO Bank

Lux Hosiery Industries Ltd

Vijaya Bank

Ramakrishna Forgings Ltd

24,000 Co-Manager
1,000 Lead Manager
20,000 Co-Manager
1,150 Lead Manager

Vishal Exports Overseas Ltd

2,700 Lead Manager

IDBI Flexi Bonds 18

70,000 Lead Manager

IDBI Flexi Bonds 19

60,000 Lead Manager

IDBI Flexi Bonds 20

80,000 Lead Manager

IDBI Flexi Bonds 21

1,00,000 Lead Manager

10

ICICI August 2003

60,000 Lead Manager

11

ICICI October 2003

80,000 Lead Manager

12

ICICI December 2003

20,000 Lead Manager

13

Sah Petroleums Limited

3200 Lead Manager

RIGHTS ISSUES
S.No.

Name of the Issuer

Issue Size

Our Role

(Rs. In lakhs)
1

The Dhanalakshmi Bank Limited

2748 Lead Manager

The Karur Vysya Bank Limited

3600 Lead Manager

Borax Morarji Limited

Moschip Semiconductor Technology

Ltd

Coonoor Tea Estates Co Ltd

196 Lead Manager

1170 Lead Manager

Lead Manager

Agro Dutch Foods Limited

Lead Manager

TAKE-OVER ASSIGNMENTS
S.No.

Name of the Issuer

Our Role

TTK Limited

Lead Manager

Advanced Micronic Devices Ltd

Lead Manager

Venkataramana Hotels Ltd

Lead Manager

Thiagarajar Mills Limited

Lead Manager

WPIL Limited / Hindusthan Udyog Limited Lead Manager

Raasi Refractories Ltd

Lead Manager

Hindusthan Udyog Ltd

Lead Manager

Kerry Jost Engineering Ltd

Lead Manager

Stewarts and Lloyds of India Ltd

Lead Manager

10

RR Greenhands Ltd

Lead Manager

11

TTK Healthcare Ltd

Lead Manager

12

Phoenix Mills Limited

Lead Manager

BUY-BACK OFFERS
S.No.

Name of the Issuer

Our Role

Titanor Components Limited

Lead Manager

Punjab Communications Ltd

Lead Manager

DELISTING OFFERS
S.No.

Name of the Issuer

Our Role

Spencer & Company Ltd

Lead Manager

Sharadha Terry Products Limited

Lead Manager

Idea Space solutions Ltd

SRP Tools Limited

DEBT ISSUES
S.No.

Name of the Issuer

Issue Size

Our Role

(Rs. In lakhs)
1

AP Power Finance Corporation Ltd

39,279 Arranger

AP Water Resources Development

Corporation

56,803 Arranger

Punjab State Industrial

Development Corporation

20,000 Arranger

Himachal Pradesh Industrial

Development Board

20,000 Arranger

AP Power Finance Corporation Ltd

25,000 Arranger

Dhanalakshmi Bank Limited

2,000 Arranger

ESOS/ESOP
S.No.

Name of the Issuer

Our Role

PCS Technologies Ltd

Merchant Banker

Suven Life Sciences Ltd

Merchant Banker

Wipro Limited

Merchant Banker

Polaris Software Tech. Ltd

Merchant Banker

Aptech Limited

Merchant Banker

HCL Technologies Limited

Merchant Banker

Gati Limited

Merchant Banker

Matrix Laboratories Limited

Merchant Banker

CORPORATE FINANCE ACTIVITIES

S.No.

Name of the Company

Nature of Assignment

Bharat Hotels Limited

Valuation of Business

Verdant Technology Ltd

Valuation Report

Onconova Inc

Syndication of Term Loan

IPICOL

Restructuring

ISSUES ON HAND
Sl

Name of the Company

Nature of Mandate

No
1

Mcnally Bharat Engineering Company Limited

Rights Issue

Bal Pharma Limited

Rights Issue

Gati Limited

Rights Issue

Mars Restaurants Limited

Public Issue

Paradyne Infotech Limited

Public Issue

Plus Paper Foodproducts Limited

Public Issue

Bartronics India Limited

Public Issue

Tulip IT Services Limited

Public Issue

SPL Industries Limited

Public Issue

10

Provogue India Limited

Public Issue

11

Rohit Ferrotech Limited

Public Issue

12

Yash Papers Limited

Further Public Issue

13

Beeyu Overseas Limited

Further Public Issue

14

ICICI

Bonds Issue

15

IDBI

Bonds Issue

16

CMWSSB

Bonds Issue

17

Power Finance Corporation

Bonds Issue

18

SIDBI

Bonds Issue

19

NHB

Bonds Issue

ISSUES IN PIPELINE
Sl

Name of the Company

Nature of Mandate

No
1

Essel Shyam Communications Limited

Public Issue

Navayuga Engineering Company Limited

Public Issue

Pioneer Embroideries Limited

Further Public Issue

NCL Industries Limited

Rights Issue

Agro Dutch Industries Limited

Rights Issue

Top/Back

MBD Home/Karvy Home

SEBI (Merchant Bankers) Regulations, 1992

Merchant Bankers have been barred from undertaking activities other than related to the securities
market. The SEBI (Merchant Bankers) Regulations, 1992 have been amended on December 19,
1997 to provide that:

a. the applicant should be a fit and proper person;

b. a merchant banker has to seek separate registration for its underwriting or portfolio
management activities;
c. the categorisation of merchant bankers I, II, III and IV has been dispensed with;
d. a merchant banker, other than a bank or a public financial institution, has been prohibited
from carrying any activities not pertaining to the securities market; and

e. the applicant should be a body corporate other than non-banking finance company.
The Merchant Bankers Regulations were amended on January 21, 1998 to provide time
upto June 30, 1998 to sever its activities or hive off its activities not pertaining to the

securities market. The Reserve Bank of India has exempted merchant banking companies
from the provisions of Reserve Bank of India Act, 1934 relating to compulsory registration
(section 451A), maintenance of liquid assets (section 451B), creation of reserve fund
(section 451C ) and all the provisions of the recent Directions relating to deposit acceptance
and prudential norms.
Merchant banking companies, to be eligible for the above exemption, are required to satisfy
the following conditions:
i.

such companies are registered with the SEBI under section 12 of the SEBI Act, 1992 and are
carrying on the business of merchant banker in accordance with the Rules / Regulations
framed by the SEBI;

ii.

they acquire securities only as part of their merchant banking business;

iii.

they do not carry on any other financial activities as mentioned in section 451 (c ) of
the RBI Act, 1934;

iv.

they do not accept / hold public deposits.

Need

for

Registration

SEBI Started the process of registration of some of the intermediaries associated with the process of
issue management. This is done to ensure professionalization of intermediaries and to curb the
malpractices
indulged
in
by
some
of
intermediaries.
The merchant banks have to be registered with SEBI and no firm can carry on any activity as a
Merchant banker, unless it holds a certificate granted by the board under the regulation of SEBI. The
investment banks serves as an intermediaries between issuing company and investing clients.
When investment banks serve as the lead managers for the securities of a client, it is necessary that
they
themselves
are
credible
in
order
to
gain
the
investor
confidence.
The registration procedure serve this purpose. By setting out certain eligibility criteria for the purpose
of registration, the regulatory bodies seek to ensure that the investment banks, which handle the
various needs of the clients, have the required infrastructure and resources to do so.
Eligibility

Criteria

SEBI has prescribed certain criteria in order to be register as merchant banks. These criteria are
included in Securities and Exchange Board of India (Merchant Bankers) Rules, 1992.
To be eligible to carry out activities of merchant banker,
than a Non Banking Finance Company. The applicant
finance, law or business management from an institute
also must employ two competent persons to carry

the applicant must be a body corporate other

himself must be a qualified professional in
recognized by the Government, the applicant
out the dealings of a merchant banker.

The applicant, his director, partner or principal officer must not have been involved in any lawsuit
associated with the securities market and they also must not have been convicted at any time for any
offence
involving
moral
turpitude.
SEBI has also set out the capital adequacy requirement to the persons waiting to be registered as
merchant bankers. The applicant must have a minimum Net worth of Rs. 5 Crore. The maximum
underwriting exposure for an investment bank should not exceed 20 times its total net worth. If the
industry practice is to keep an exposure of around 15 times the net worth, it would be termed as the
Industry
Capital
Adequacy
Requirement
as
against
regulatory
suggestions.
In the term of regulations, the firms must meet the capital adequacy in both the countries from where
the capital flows out as well as where it flows in. The procedure for registration must be followed and
the relevant forms should be submitted by the merchant bankers.