Presented by

Rajesh Mandalik Kumar Gaurav Pranay Kargaonkar Abdul Qadir Saify Pavan Kumar Reddy Mukesh Sahu

Merchant Banking
The Dictionary of Banking and Finance defines a merchant bank as “ a bank which arranges loans to companies, deals in international finance, buys and sells shares and launches new companies on the stock exchange, but does not provide normal banking services to the general public ”.

Bird’s eye view of Merchant Banking :
Merchant Banking is a fee-based service. It arranges funds rather than providing them. Originally Merchant Banking business was started in Italy and France. Later on, it came into existence in the U.K., and the U.S.A. In India, it has become popular from 1983-84.

Merchant Banking In India
 The Grindlays Bank initiated the merchant

banning activity in Indian Capital 1969.

Market in

 It’s business forms was on the management of

Public Issues and Financial Consultancy.
 City Bank introduced its merchant banking

division in 1970.

Functions of Merchant Banking
 Corporate Counseling  Portfolio Management  Venture Capital Financing  Mergers and Amalgamations  Project Counseling  Underwriting

6

Functions of Merchant Banking
Contd....

 Export Financing for capital goods  Hire purchasing  Equipment leasing  Pre-investment Studies  Valuation of assets  Financial management

7

Private Investment Bankers

Lehman Brothers Merrill Lynch etc.

Bought loans that fall outside the specs of agencies.

Core Business Portfolio

Non-fund Based

Merchant Banking Services ->Management of Public Offers of Equity and debt Instruments. ->Rights issues. ->Buyback Offers. Etc.

Advisory and transaction Services in ->Project Financing. ->Syndicated loans. ->Private Equity/Venture Capital. ->Business Advisory. Etc.

Core Business Portfolio

Fund Base

Allied Businesses
->Asset Management services. --Mutual Funds. --Portfolio Management --Venture capital etc. ->Secondary Market Services. --Brooking --Equity Research.

->Underwriting. ->Market making. ->Bought Out Deals. ->Trading in Equities, bonds and derivatives.

. Securities and Exchange Board of India (SEBI) has divided merchant bankers into four categories, which are as follows: -

SBI Capital Markets Ltd. Kotak Mahindra Capital Company. JM Morgan Stanley Ltd. DSP Merrill Lynch Ltd. ICICI Securities Ltd. IDBI Capital Markets Ltd.. Enam Financial Consultants Ltd.

Kotak Mahindra Capital Company Ltd.

Objective
Offers a wide suite of capital market and

advisory solutions to clients covering leading domestic and multinational corporations, banks, financial institutions and government companies across major industry sectors.

Brief Outline
India's premier Investment Bank . A subsidiary of Kotak Mahindra Bank Ltd. India's premier Investment Bank . A subsidiary of Kotak Mahindra Bank Ltd. Reconstitution from a private company to a public Reconstitution from a private company to a

limited company effective from June June 2003. public limited company effective from 13, 13, Acts 2003. lead manager to several (IPO's) and as the Acts clients in manager to the public and helps its as the lead in accessing several (IPO's) and accessing the public and helps its clients private equity markets. private equity markets.
encompassing the following business areas of areas of operations: operations: Mergers & Acquisitions Advisory. Raising capital from Equity and Debt Capital Mergers & Acquisitions Advisory. Markets. RaisingRaising capital Equity and Debt Capital Markets. capital from from Financial Sponsors. RaisingInfrastructure Financing Advisory. capital from Financial Sponsors. Structured Finance Advisory. Infrastructure Financing Advisory. Structured Finance Advisory.
services, encompassing the following business

KIB provides high quality financial advisory  KIB provides high quality financial advisory services,

Awards
Best Investment Bank in India by Finance Asia for 2008, 2007 and 2006. The Best Equity House in India by Asia money in 2008.

ICICI
ICICI Securities is a SEBI registered Category I

Merchant Banker and a pioneer of numerous innovative practices in Indian Investment banking space.

ICICI SECURITIES LTD.
Merchant banking

Corporat e finance

Equity capital market

Advisory services

Equity Capital Market practice comprises: IPO  Rights  Convertible Offerings  Qualified Institutional Placement (QIP)  Private Placement  International offerings.

Advisory services comprises: Mergers and Acquisitions (M&A)  Private Equity  Infrastructure Advisory  Corporate Restructuring  Joint Ventures.

MERGERS AND AQUISTIONS
ICICI Securities was amongst the first Indian

investment banks to form a dedicated M&A practice and continues to be a leader by providing innovative and customised solutions to achieve the varied objectives of clients.

Private equity
 ICICI help companies to raise capital during the seed, growth and expansion phases as well as acquisition financing, structuring the deal to maximize value for all its stakeholders. industry knowledge across multiple sectors, wideranging deal structuring capabilities and thorough grasp of the regulatory environment make us the 'banker of choice', for companies and private equity funds alike.

It has offered superior services across-thespectrum corporate finance activities in sectors as diverse as:      IT Media Telecom Pharma Banking Infrastructure

ICICI advice on a wide variety of products

Private equity financing

Secondary sale transactio ns

Pre IPO deals

JM Morgan Stanley
Established in 1935 Morgan Stanley operated two joint ventures with

JM Financial Group, under the name of JM Morgan Stanley. Global offices are in Americas, Asia pacific, Europe, Africa

In India its branches are in Mumbai and west

Services by STANLEY:-

Brokerage Solutions Advisory Solutions Life Cycle Solutions Provides customized services Last September it offers private wealth

management services  some of the investments products are stocks, bonds, mutual funds, insurance, annuities etc.

JM Morgan Stanley Investment Banking

Industry Coverage
Basic Materials ,consumer products, communications, energy, financial institution, financial sponsors, healthcare, real estate, retail, technology, transportation

IDBI project advisory services broadly includes:
Overview of the promoting company . Review of the Project Structure and Project

Costs including various assumptions.  Capital Structuring . Real Estate Advisory. Identification and evaluation of various sources of finance . Financial modelling . Risk Analysis and Allocation . Development of a Security Package .

Strategic planning
Business and Strategic Planning. Business Restructuring . Entry Strategy . Policy Advisory. Organisation Restructuring . Bid Process Management . Process Consulting .

Financial planning
Business Valuation . Financial & Commercial Due Diligence . Merchant Financial Appraisal . Joint Venture & Contract . Bid Process Management . Disinvestments . Infrastructure Advisory . Financial / Debt Restructuring . Structured Finance & Securitisation .

Quiz

1.

Which bank has initiated merchant banking activity in India. A) ICICI Bank B) Grindlays Bank C) Canara Bank D) None

CCP - 504 (B). 81

35

Quiz
2. Which
is the first Indian Bank to start its merchant banking activity in India? A) State Bank of India B) Hongkong Bank C) Bank of India D) Canara bank

CCP - 504 (B). 81

36

Quiz

3. Which commission stressed the need for merchant banking activity in India? a) Banking Commission b) RBI committee c) Chore Committee d) None

CCP - 504 (B). 81

37