Lesson 2 of 7
The investment banking department helps corporates and government clients in key financial strategic decisions. It helps corporates who are looking at raising funds from the market for expansion. In this event it helps the company assess the amount of funds it is looking at mopping up from the market. Based on this the company would go for a public offering or private placement. In public offering the company would offer stock to the public. In private placements, accredited investors would be sought.
In the case of public offerings the investment bank would help the corporate determine if they should sell large number of stocks to few investors or a small number of stocks to many.
It would help determine the pricing of the stock and placements. (Countries those were eligible to buy the stock).
If a public sector company were looking at disinvesting non-core divisions it would employ a investment bank to seek buyers for these divisions.
Since these decisions are both of high risk and value to the concerned parties the credibility of these banks and their teams are duly considered. These teams usually are composed of highly trained professionals from management, law and finance. They usually undergo training in best practices before they are put before a client. Investment banks are increasingly looking at hiring students from different geographical backgrounds in order to help companies that are increasingly becoming global.