Investment Banking Public and Private Placement参考.ppt

Investment Banking Public and Private Placement 15 Chapter Outline What is investment banking? Functions of an investment banker Dilution of earnings Public versus private financing Leveraged buyouts and debt for restructuring of a corporation The Role of Investment Banking The investment banker is the link between the corporations in need of funds and the investor Responsible for designing and packaging a security offering Responsible for selling the securities to the public Concentration of Capital Allows large firms to take additional risks and satisfy the needs of an increasingly demanding capital market Competition has propelled many businesses to the position they are at now Raising capital has become an international proposition Firms that are very large have the ability to compete International consolidations with international buy-outs of banks have become common Gramm-Leach-Bliley Act (1999) Repealed the separation policy of the Depression-era laws Which included separating banking, brokerage, insurance, and investment banking into separate entities Federal Reserve and Treasury: Have the power to impose restrictions on the activities of the banks Allows strong banks to participate in the venture capital market Investment Banking Competitors There is intense competition in the market Being a leader in one sector helps a firm’s overall reputation It, however, does not ensure success in other areas Functions of the Investment Dealer Underwriter: buying the security and reselling it to the public (large companies). Takes a risk. selling security on commission basis (unknown companies) Market Maker: ensuring an available market by buying and selling the security Advisor: on securities issues, mergers and acquisitions, leveraged buyouts, corporate restructuring Agent: for private placements, mergers, acquisitions Underwriter An investment banker underwrites any risk associated with a new issue: By giving a ‘firm commitment’ to purchase the securities from t