TOPIC : MERCHANT BANKING SERVICES

1. INSTITUTE OF ENGINEERING AND
TECHNOLOGY
DEPARTMENT OF MBA
PRESENTATION ON : MERCHANT BANKING
SERVICES
SUBMITTED BY SUBMITTED TO
AMARESH I D Prof SHASHIKANTH

3. MERCHANT BANKING
• There is no universal definition for merchant banking. It assumes diverse
functions in different countries. Merchant banking may be defined as an
‘institution which covers a wide range of activities such as
underwriting of shares, portfolio management, project counseling,
insurance etc…They render all these services for a fee
• ORIGIN :
• The term merchant banking originated from the London who started
financing foreign trade through acceptance of bills
• Later they helped government of under developed countries to raise
long term funds
• Later these merchants formed an association which is now called
“Merchant Banking and Securities House Association”

4. MERCHANT BANKING SERVICES
• Project counselling
• Loan syndication
• Issue management
• Underwriting of public issues
• Managers , consultants or Advises to the issue
• Portfolio management
• NRI investment
• Advisory services relating to mergers and take
over
• Off shore finance

5. Project counselling
• It includes:
• Preparation Of Project Reports
• Deciding Upon The Financing Pattern
• Appraising The Project Relating To Its Technical
Commercial And Financial Viability
• It Includes Filling Up Of Application Forms For
Obtaining Funds From Financial Institutions.

6. Loan syndication
Assistance is rendered to raise loans for projects
after determining promoter’s contribution.
These loans can be obtained from a single
institution or a consortium.

7. Issue management
• Management of issues involves marketing of corporate securities
I,e…equity shares, preference shares and debentures by offering them
to public.
 Pre-issue activities:
• They prepare copies of prospectus and send it to SEBI and then file
them to Registrar of Companies
• They conduct meetings with company representatives and advertising
agencies to decide upon the date of opening issue, closing issue,
launching publicity campaign etc..
• They help the companies in fixing up the prices for their issues
 Post-issue activities:
• It includes collection of application forms, screening of applications,
deciding allotment procedure, mailing of allotment letters, share
certificates and refund orders

8. Underwriting of public issues
• Underwriting is an insurance to the
company which makes public issues.
Raising of external resources is easy for the
issues backed by well known underwriters.

9. Managers , consultants or Advises to
the issue
• SEBI insist that all issues should be
managed by at least one authorized
merchant banker but not more than two.
For an issue of 100 corers, up to a maximum
of four merchant bankers shall be
appointed .They help in listing of shares in
stock exchange, completion of formalities
under Companies Act etc..

10. Portfolio management
• Portfolio refers to investment in different kinds of
securities such as shares, debenture issued by different
companies. It is a combination of assets but a carefully
blended asset combination.
• Portfolio management refers to maintaining proper
combination of securities in a manner that they give
maximum return
• Investors are interested in safety, liquidity and profitability
of his investment but they cant choose the appropriate
securities. So merchant bankers help their investors in
choosing the shares. They conduct regular market and
economic surveys

11. NRI investment
• NRIs has to follow lots of complicated rules
for investing in the shares in India.
Merchant bankers help them in choosing
the shares and offer expert advice fulfilling
government regulations thus mobilizing
more resources for corporate sector.

12. Advisory services relating to mergers
and take over
• Merger is a combination of two or more
companies into a singe company where one
survives and other loses its existence
• Takeover is the purchase by one company
acquiring controlling interest in the share
capital of another company
• Merchant banker acts as middlemen between
offeror and offeree, negotiates mode of
payment and gets approval from government

13. Off shore finance
• Merchant bankers help their clients in :
Long term foreign currency loan
Joint venture abroad
Financing exports and imports
Foreign collaboration arrangement