part 6.docx

FUNCTIONS OF MERCHANT BANKERS

The main functions of merchant bankers [ 1] are as follows: 1. Management Management of Debt and Equity Offerings:

This forms the main function of the merchant banker. He assists the companies in raising funds from the market. The whole task includes instrument designing, pricing the issue, registration of the offer document, underwriting support, marketing of the issue, allotment and refund and listing on stock exchanges. 2. Placement and Distribution:

The merchant banker helps in distributing various securities like equity shares, debt instruments, mutual funds, insurance products, and commercial paper, to name a few. The distribution network of the merchant banker can be classified as institutional and retail in nature. 3. Corporate Advisory Services:

Merchant bankers offer customized solutions to their clients' financial problems. Financial structuring includes determining the right debt-equity ratio and the framing of appropriate capital structure theory. 4. Project Advisory Services:

Merchant bankers help their clients in various stages of the project undertaken by their clients. They assist them in conceptualizing the project idea in the initial stage. Once the idea is formed, they conduct studies to examine the viability of the proposed  project. 5. Loan Syndication:

Merchant bankers arrange to tie up loans for their clients. This takes place in a series of steps. Firstly, they analyze the pattern of the client's cash flows. Then the merchant  banker prepares a detailed loan memorandum, which is circulated to various banks and financial institutions and they are invited to participate in the syndicate. The  banks then negotiate the terms of lending on the basis of which the final allocation is done. 6. Providing Venture Capital Financing:

Merchant bankers help companies in obtaining venture capital financing for financing their new and innovative strategies

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