What is an investment bank?

Investment banking is investment banking, investment banking is a class of financial institutions corresponding to commercial banks. Mainly engaged in securities issuance, underwriting, trading, corporate restructuring, mergers and acquisitions, investment analysis, venture capital, project financing and other business non-bank financial institutions, is the main financial intermediary in the capital market.

Investment banking is a constantly evolving industry. Within the financial field, the term investment banking has a very broad meaning. From a broad perspective, it encompasses a wide range of financial services; from a narrower perspective, it encompasses a more traditional range of businesses.

The main business of investment banking

I. Underwriting. This means that the lead underwriter and its syndicate members agree to buy all the securities issued at an agreed price and then sell them to their clients. At this point the issuer takes no risk and the risk is passed on to the investment bank.

II. Tender Offer. It is usually done when the investment bank is in a situation where there is more passive competition. The securities that are issued using this method are usually higher credit and quite popular with investors.

Thirdly, the underwriting. This is generally formed because the investment bank considers the security to have a low credit rating and high underwriting risk. At this time, the investment bank only accepts the issuer's commission, acting as an agent for the sale of securities, such as in the stipulated period of time plan for the issuance of securities are not sold out in full, the remaining portion of the return to the issuer of the securities, the issuance of the risk borne by the issuer itself.

Four, sponsorship marketing. When the issuer of the company's capital increase, its main target is the existing shareholders, but can not ensure that existing shareholders are subscribed to its securities, in order to prevent difficulties in raising the required funds in a timely manner, and even cause the company's stock price decline, the issuer generally have to entrust the investment bank to deal with existing shareholders to issue new shares of the work, so that the risk will be passed on to the investment bank.