Professional Documents
Culture Documents
An Overview ofPresentation
Investment Bankingon
in
Financial Markets &
Bangladesh
8/20/2016
Institutions
Submitted To:
Dr. H. M. Mosarof Hossain
Professor
Dept. of Finance
University of DhakaSubmitted By:
Name ID No.
H. A. Mamun 31033
S. M. 31014
Nuruzzaman
Rocky Mahmud 31032
Tarik Hassan 31016
Sany 31043
Investment Banking in Bangladesh
Investment
Banking:
Investment Banking is an American
synonym of merchant banking. It is a
financial institution that assists
corporations and governments in
raising capital by underwriting and/or
acting as the client's agent in the issuance of securities. An
investment bank may also assist companies involved in
mergers and acquisitions, and provide supplementary services
such as market making, trading of derivatives, fixed income
instruments, foreign exchange, commodities, and securities. It
also provides advisory services on corporate matters to the
firms they lend to.
An Investment
Bank could be
best defined as
a financial
institution
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Investment Banking in Bangladesh
In Bangladesh a
Merchant bank is said to be a full-fledged merchant bank that
performs all the aforementioned activities covering Issue
Management, Underwriting, and Portfolio Management and
providing Corporate Advisory Services.
AAA Finance & Investment Limited is one of the full-fledged
merchant Banks of Bangladesh that delivers a whole range of
Investment Banking services including traditional merchant
banking activities such as Issue Management, Corporate
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Investment Banking in Bangladesh
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Investment Banking in Bangladesh
Functions of Investment
Banking:
Investment banks are considered as the original banking
institutes that came into being during the Middle Ages. With the
evolution of economic terms and practices, Investment banking
services were differentiated from those of an ordinary bank.
Today, Investment banks are regarded as the banks of
corporate house and organizations.
Ordinary banks provide services to common people as well as
organizations, but Investment banking serve a number of needs
and requirements of organizations and businesses. The fact
that Investment banks are the wholesale banks specifies the
use of these banks for some important purposes.
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Investment Banking in Bangladesh
Investment
Banking
Asset
Corporate Financial
Manageme
Finance Advisory
nt
Private Portfolio
Merger & Business Fesibility
Placement Manageme
Acquisition Valuation Study
& IPO nt
a. Legal Analysis:
Since a security is being sold, the security must first be
created. Most of us think of a bond or a common stock is
being merely a certificate. In reality, the certificates are
evidence of a legal document that defines the rights of the
security holder and the rights of the company. A bond
contract, for example, may easily be 100 pages or longer.
The investment bank's staff attorneys will construct the bond
or stock agreement and submit it to the Bangladesh
Securities Exchange Commission (BSEC) for its approval. The
BSEC will ensure that all relevant financial details are being
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Investment Banking in Bangladesh
b. Market Analysis:
The investment banker will then determine the fair price to
be placed on the securities. In the case of bonds, the
investment banker will recommend an interest rate that
must be paid in order to achieve an acceptable trade-off: a
rate high enough to attract investors and low enough to be in
the company's best interest. In the case of common stock,
the investment banker will recommend the maximum price
that will allow the shares to sell relatively quickly.
The manager will begin preparing a prospectus (i.e., a
financial disclosure brochure used to help sell the issue). A
tombstone announcement will be prepared also to help
advertise the upcoming sale.
2. Stock Underwriting:
This is one of the most common functions of an Investment
bank. When owners of a large company want to raise capital
through investors from the stock markets, they can acquire the
services of an Investment bank to take care of the job. The
bank will determine the amount of stocks that are to be issued
as well as their price, and when to issue the new stock. The
Investment bank will file all of the necessary paperwork with
the proper market division and may also market the stock. If
there's a large stock offering, a few Investment banks might
work on the project together. However, one of the banks will
typically act as the head underwriter on the job.
3. Issue Management:
In the function of issue management, an Investment Bank will
help the capital market to increase the supply of securities. The
bank will help a private limited company to convert into a
public limited company. The bank will do this by dealing with
the proper authorities and by preparing a prospectus for the
public issue of debentures and shares. The bank will help
collect the application money, scrutinize the applications, as
well as arrange for the allotment of the debentures and shares.
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4. Portfolio Services:
Another important function of an Investment bank is to supply a
variety of portfolio management services to their customers.
Most Investment banks can also provide various other services
to their clients. These often include actions such as project
counseling, mergers and acquisitions, and pre-investment
studies. Some of the other functions may be asset
securitization, factoring, and Capital restructuring.
5. Loan syndication:
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6. Corporate counseling:
Corporate counseling denotes the advice provided by the
Investment Banking to the corporate unit to ensure better
corporate performance in terms of image building among
investors, steady growth through good working and
appreciation in market value of its equity shares. The scope of
corporate counseling, capital restructuring and, portfolio
management and the full range of financial engineering
includes venture capital, public issue management, and loan
syndication, working capital, fixed deposit, lease financing,
acceptance credit, etc. However counseling is limited to only
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8. Selling:
Each of the investment banks will likely have its own sales
force. However, additional brokerage firms may be invited to
help sell the issue in return for a commission on the sale. These
firms may easily number in the dozens for a large issue.
Collectively, these brokerage firms are known as the selling
group.
Investment Banking In
Bangladesh: Rules & Regulations:
The Bangladesh Securities & Exchange Commission (BSEC)
granted authority to 17 non-bank financial institutions in 1997
to conduct merchant banking business in Bangladesh under the
Securities and Exchange (Merchant Bankers and Portfolio
Manager) Regulations 1996,
writer of two issues and form five new portfolios of its clients
besides its own in a calendar year. A full-fledged Investment
bank has to perform at least two operations among the three
including managing portfolio in a calendar year.
Advantages of Investment
Banking:
Investment banks perform functions that cannot be
carried out by businesses on their own.
Investment banks have access to traders, financial
institutions, and markets that companies or individuals
could not possibly reach.
By using their skills and contacts, merchant banks can get
the best possible deals for their clients.
Disadvantage of Investment
Banking:
Investment t banks are really only for large corporate
customers, or extremely wealthy smaller businesses
owned by individual clients
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Potentiality of Investment
Banking:
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Conclusion:
The Investment banker plays a vital role in channelizing the
financial surplus of the society into productive investment
avenues. Hence before selecting an Investment banker, one
must decide, the services for which he is being approached.
Selecting the right intermediary who has the necessary skills to
meet the requirements of the client will ensure success. It can
be said that this project helped me to understand every details
about Investment Banking and in future how its going to get
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The End
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