Why are investment banks needed? Who can avail their services?

The origin of banking can be traced back to England, where the goldsmith bankers from the 17^th century acted as the custodians of the majority of people’s money in the country. This format of banking further started spreading across the world during the colonial times and gave birth to the new form of banking as we know it today. Public banks take care of the short-term financing requirements and is open to the general public. Investment banking, however, is different. They take care of the long-term finance requirements, provide financial capital required, and are not open to the general public. Investment banking companies, therefore, came into existence when businesses started requiring higher capital with a longer lease on their returns on investment and have started providing a plethora of new services as well. In modern times, their primary role is to raise debt and equity funds and help companies expand their own business and the business of their clients as well. The clients of these investment banking companies include public sector companies, private sector companies, HNIs and Ultra HNIs.

Anyone that requires to use the following services, can get the help of an investment bank:

To raise capital – Any association of people when express their interest to serve the general public and register themselves as a company to do so, will require capital. Any existing companies that hope to upgrade their services, open new branches, start new projects, want to acquire a new company or merge will need investment banking services. These companies will raise capital in the form of debt or equity and help their clients achieve their goal.

Stock trading and sales – Investment banking services are also availed by companies who are looking to divulge in stock trading or those who want to short securities. They also help in areas of placing a new stock, marketing securities, conducting a market research, publishing and reporting.

Advisory services – In the modern world, investment banking companies have started providing supplementary services to their clients such as business valuation, strategic planning, restructuring of finances, analysing assets, etc. Any service that can help their client perform their business activities smoothly are now being performed by several big-time and small-time players.