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ANALYSIS OF INVESTMENTBANKING

IN REAL ESTATE IN INDIA

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Overview of investment banking

Investment banking includes a wide variety of activities, including underwriting,

selling, and trading securities, providing financial advisory services, and managing assets.

Investment banks cater to a diverse group of stakeholders companies, governments, non-

profit institutions, and individuals and help them raise funds on the capital market. They

perform the following major functions for their customers:

Serve as trading intermediaries for clients. Lend and invest banks assets. Provide advice on mergers, acquisitions, and other financial transactions. Research and develop opinions on securities, markets, and economies. Issue, buy, sell, and trade stocks and bonds.

Investment banks once contrasted sharply with commercial banks, where people

mainly deposited their money and required commercial and retail loans. In recent years,

though, the two types of structures have become increasingly similar; commercial banks now

offer more investment banking services as they attempt to corner the market by presenting

themselves as one-stop shops.

Investment banks do differ from brokerages and broker-dealers, though, even though those

three entities are often thought of as one and the same. A brokerage firm takes a commission

for assisting in the purchase and sale of stocks, bonds, and mutual funds. A broker-dealer

executes similar functions, but it also trades for its own account. An investment bank actually

is a broker-dealer that provides corporations with financial services, such as assistance with

initial public offerings, merger and acquisitions advice, and strategic planning.

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Introduction

I nvestment bankingis a particular form of banking which finances capital requirements of an

enterprise. Investment banking assists as it performs IPOs, private placement and bond

offerings, acts asbroker and carries through mergers and acquisitions. Investment banking is

a field of banking that aids companies in acquiring funds. In addition to the acquisition of

new funds, investment banking also offers advice for a wide range of transactions a company

might engage in.

Traditionally, banks either engaged in commercial banking or investment banking. In

commercial banking, the institution collects deposits from clients and gives direct loans to

businesses and individuals.

Through investment banking, an institution generates funds in two different ways.

They may draw on public funds through thecapital marketby selling stock in their company

and they may also seek outventure capital or private equity in exchange for a stake in their

company.

An investment banking firm also does a large amount of consulting. Investment

bankers give companies advice onmergers and acquisitions, for example. They also track the

market in order to give advice on when to make public offerings and how best to manage the

business' public assets. Some of the consultative activities investment banking firms engage

in overlap with those of a privatebrokerage,as they will often give buy-and-sell advice to the

companies they represent.

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Few Facts about Investment Banking

Unlike traditional banks, investment banks do not accept deposits from and provide loans toindividuals also called investment banker.

Investment banks help companies and governments (or their agencies) raise money byissuing and selling securities in the capital market (both equity and debt).

Almost all investment banks also offer strategic advisory services for mergers, acquisition,divestiture or other financial services for clients, such as:

trading of derivatives fixed income foreign exchange commodity

Trading securities for hard cash or securities (i.e., facilitating dealings, market-making), orthe endorsement of securities (i.e., underwriting, research, etc.) is referred to as the "sell

side".

On the other hand the "buy side" constitutes : the pension fund, mutual funds,

hedge funds, The investing public who use the goods and services of the sell-side with the intention

of make best use of their return on investment.

Many firms have both buy and sell side mechanism

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Function of Investment Banking

Investment banks have multilateral functions to perform. Some of the most important

functions of investment banking can be jot down as follows:

Investment banking help public and private corporations in issuing securities in theprimary market, guarantee by standby underwriting or best efforts selling and foreign

exchange management. Other services include acting as intermediaries in trading for

clients.

Investment banking provides financial advice to investors and serves them byassisting in purchasing securities, managing financial assets and trading securities.

Investment banking differs from commercial banking in the sense that they don'taccept deposits and grant retail loans. However the dividing line between the two

fraternal twins has become flimsy with loans and securities becoming almost

substitutable ways of raising funds.

Small firms providing services of investment banking are called boutiques. Thesemainly specialize in bond trading, advising for mergers and acquisitions, providing

technical analysis or program trading.

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Basic of Investment Bank

The banking sector is one of the biggest contributors to a nation's economy, provided it is

managed in an innovative and professional environment. Investment banking is one rapidly

growing form of banking.

An investment bank is a type of financial intermediary that performs a variety of

functions such as underwriting, facilitatingmergers andacquisitions or brokerage services for

institutions. The work of an investment bank begins right from the counseling before the

underwriting sessions, and stretches right till the securities are properly handled and

distributed. Investment banks play a very crucial role in market transactions on behalf of, or

for private and public investors, government and corporations. There are a number ofinvestment banks that also provide highly professional services in assisting their clients with

industrial know-how on various parameters.

Industries from diverse sectors like media and telecommunications, real estate,

industry, finance, health care, consumer products and various such segments are provided

assistance by investment banking services. Along with these, an investment bank also deals

in the securities, trading services, credit counseling, financial engineering and merchant

banking. The primary source of income for investment bankers is the commissions, fees and

gain margins on transactions provided for the above mentioned institutions.

The role of an investment bank as a mediator is to directly familiarize the nature of

the investment and the entity being invested in. In case of conventional banking, people

deposit finances in the form of cash, assets and so on with a bank. The bank in turn can lend

to a borrower under some standard norms to utilize in his own way. In the case of investment

banking, there is a direct familiarization of both the investor and the borrower. This means

that an individual or institutional investor has an option to choose his type of investment or

division of investment into any given entity looking out for funds. An investment bank can

also assist investment in the financial market.

Investment banks provide companies with expert guidance and formulate strategies

on their behalf for disinvestment, and also to merge or acquire new entities. Good investment

banking involves procedures to maintain and upgrade the quality of services and keep a close

watch on the emerging trends in the market, where their customer's money can be invested. It

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also incorporates risk management services in order to streamline the flow of capital, check

its overuse, and come up with a detailed analysis of credit risks.

The investment banking market was increasing leaps and bounds, until the present

recession struck. Banks all over the world are trying to recoup the losses. The US is the

biggest market for investment banks, followed by Europe, Middle East, Africa and Asia. The

global hubs of investment banking are a few economically sound centers like London, New

York and Tokyo. However, investment banking is not restricted in its scope to a few regions

of the world. It caters to a global community which makes it highly sensitive to global ups

and downs, along with innovative fluctuations.

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