What is the role of an investment banker?

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A career as an investment banker is an attractive one due to its high-profile nature and huge salaries. As an investment banker, you are basically a corporate financial advisor.

The investment banker advices the government and other corporates on various matters concerning capital markets. They rarely deal with individual investors. Their role as advisors is to help their clients make money in the stocks market, provide assistance with mergers and acquisition transactions and offer a range of financial advisory services.

When the capital markets are booming, the investment bankers are also smiling all the way to their banks as they make more income for the transactions they carry out.

Organizing finance

An investment banker may come in handy when a huge company intends to acquire an asset is considering issuing bonds for financing this investment. At the same time, if the government intends to expand infrastructure in the transport industry, or work on a big county project, the investment banker will step in to help the government raise money.

The investment banker would facilitate the entire process of raising the funds, form planning the issuing of the bond, to pricing, managing and selling of the bonds.

They also play a key role when it comes to raising equity finance. He will oversee the entire Initial Public Offering (IPO) process from setting up the prospectus which has the terms and conditions, the risks involved as well as setting up the ideal price for the shares.

Underwriting services

The investment banker is also in charge of underwriting the deals in the process of organizing financing through capital markets. They manage the potential risk by purchasing the shares from the company and selling them to individual or corporate investors. They always put a profit margin when disposing off the shares so as to maximize n the sale. A group of investment bankers known as a syndicate usually pool their resources together to purchase these securities and spread out the risk amongst themselves.

Private placements

Other that raising capital through the IPO, the investment banker can advice the client to raise capital through private placements. An example of such private placement is offer bonds to a corporate investor like an insurance company or a retirement benefit scheme. In most cases, you will raise money faster than with the IPO approach and the regulations are more flexible.

Acquisitions and mergers

The investment banker also plays a key role when one company has plans to buy off another. They will advise the buying company of the acquisition process including the pricing, valuation of the company being bought. Similarly, the company being bought will also engage an investment banker to advise them on the offer they should put in the market.

The investment banker plays a major and important role in companies that are seeking ways to raise capital in order to finance their growth, expansion and other business activities. They not only advise companies how to raise capital, but how to put it into good use once it is raised.

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