Investment Banking & Its Various Types
March 19, 2020
Banking is an integral part of the economic structure, and it helps the economy to perform optimally and stay in harmony with the market forces. The gulf between common people and the market often gets bridged by the commercial banks that cater to the financial needs of the mass in line with the market dynamics. Proper allocation of resources and investments are also done by the banking institutions between the common people and the market. However, when it comes to a transaction between the corporate authorities or the investors and the market, a specialised banking channel comes to the fore, and that is what we know as investment banking.
While commercial banking practices take care of the savings, loans, and deposits of the common people, investment banking focuses on selling and purchasing of bonds, equities, and stocks of companies, issuance of IPOs for the companies, and advising on future investment planning of the business houses. Investment banking can help business organisations in a multifaceted manner and has a multi-dimensional operational frame.
As the commercial banks help common people with their investment plans and money management, investment banks look after the investment requirements and strategies of the big companies. Investment banking help enterprises in many ways. Right from helping in taking the right merger and acquisition decisions to advising on long term investments and issuance of IPOs to integrate the public interest in any business, investment banking can be of much help for the market giants.
Investment banking can be hence termed as a part of the bigger banking infrastructure dedicated to serving the government institutions, corporations, and the big entities of the market. Extending valuable advice from time to time to these organisations is a responsibility of investment banking institutions to ensure long term market sustenance.
Let us now have a look at the different types of investment banking entities and their core operations:
Regional Boutique Banking
This type of investment banking operations remain restricted within a geographic territory. It is this aspect that has endowed this type of banking its name as ‘regional’ banking. With a few numbers of employees, these banking organisations basically work on limited M&A deals of the not-so-big clients of the surrounding market. These are the smallest of the investment banks and generally handle smaller M&A deals of not more than $50 to $100 million or even less.
Elite Boutique Banking
This variety of banking operations emerge out of long term regional operations. Extending the value of deals and the extent of client base gradually over time, the regional banking organisations grow up to the elite boutique status. The only change that takes place is concerned with the value of the deal and the quality of the clientele but not the variety of services. This type of investment banking too deals with the M&A deals primarily.
Middle Market Banking
This variety of investment banking operations covers almost every sort of service available under investment banking. From equity capitals to financial management, asset management, debt capital management, restructuring, IPOs, and M&A, middle-market banking helps in every aspect.
Bulge Market Banking
Covering the largest segment of the market and involving the most prestigious client base of Fortune 500 and Fortune 100 companies, bulge market banking offers real-time solutions for equity research, asset management, M&A, and every other variety of service that belongs to investment banking service.
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