What are the Types of Merchant Banking Services

Merchant bank is key player of the capital market segmentation and its main function is to rendering capital market related services on behalf of its clients. In some countries merchant bankers, on behalf of the issuing companies, maintain register of shares and debenture holders, pay the dividends and interest on debentures etc. It relieves the issuing company from the hassles of maintaining  a full-fledged share department for attending to the multitude of stock-holders. The common services offered by merchant bank are as follows:

Types of Merchant Banking Services

• Manager to the Issue: Issue management is the most common activity in merchant banking. Issue manager manages new issues of equities, bond and debentures, prepares prospectus, selects banks for accepting deposits against initial public offering, selects the newspapers and other media for issue of prospectus and notices concerning the new issues, attends to the company’s formalities with the regulatory bodies like Registrar of Joint Stock Companies, Central Bank, Securities & Exchange Commission to launch the issue in the market.

• Credit Syndication: Credit Syndication is also another important function of merchant bankers in many countries. The need for syndication arises when a company needs finance for a big amount which a financial institution is unable or unwilling to provide all by itself on account of perceived risk arising from exposure to a single borrower.  

• Investment Management: The merchant bankers help the small investors to operate in the stock market by opening beneficiary of owners accounts facilitate transactions through the online central depository system. They also help the clients to reach investment decisions.

• Arranging Mergers: Merchant bankers often arrange mergers of two or more companies and advise them on formalities and fixing the terms and conditions of sale of  one company from another company.

• Act as a Custodian: Merchant bankers can act as a custodian for safe custody of securities o behalf of their clients.

• Corporate Counseling: A merchant bank with its expertise and depth of knowledge about money and capital market is equipped to provide a wide range of services to the business enterprise.