Equity Markets - 1

Group Members
Kunal Chitnis 304
Manali Choksey 305 Shreya Dedhia 309 Priyank Kolwalkar 320 Sagar Mehta 322 Aakash Patil - 332

Acknowledgement
We express our gratitude towards Prof. Rohan Sir, for giving us an opportunity to elaborate on the given topic of Merchant Banking and we are also grateful to our entire team for contributing their best knowledge, skill and expertise as required, in making this presentation fruitful.

Definition
An organization that underwrites securities for corporations, advices such clients on mergers, and is involved in the ownership of commercial ventures. According to Mr. Rosenburg Any person who is engaged in the business of issue management either by making arrangements regarding selling, buying or subscribing to the securities as manager; consultant adviser; or one rendering corporate advisory services in relation to such activities in the management. According to MOF, India

Introduction
Merchant Banking is a combination of Banking and consultancy services.
It provides consultancy, to its clients, for financial, marketing, managerial and legal matters. Consultancy means to provide advice, guidance and service for a fee. It helps a businessman to start a business.

It helps:
To raise (collect) finance.
To expand and modernize the business.

In restructuring of a business.
To revive sick business units.

It also helps companies to register, buy and sell shares at the stock exchange.

Sr. No 1 Corporate Counseling 2

Services of Merchant Banks Particulars Summary

Corporate counseling denotes the advice provided by the Merchant Banking to the corporate unit to ensure better corporate performance. Preparation of project reports, deciding upon the financing pattern, appraising the project relating to its technical, commercial and financial viability.

Project Counseling and Promotional Activities

3 Loan Syndication

Assistance rendered to get term loan for project, help client make appraisal, designing capital structure etc

4 Issue Management Marketing corporate securities, intermediary in transfer of capital from one who owns to needy 5 Underwriting Guarantee given by the underwriter, make raising of external resource easy

6 Managers to Issue

Drafting, completion of formalities, appoint Registrar etc

7 Portfolio Management 8 Mergers and takeovers

Investment in different kind of securities Middlemen in setting negotiation

9 Off Shore Finance 10 Non-Resident Investment

Help in areas involving foreign currency Provide help in better and smooth trade to NRIs

GUIDELINES FOR MERCHANT BANKERS :

SEBIs authorization is a must to act as merchant bankers. Authorization criteria include: Professional qualification in finance, law or business management management

Infrastructure like office space, equipment and man power

Capital adequacy Past track of record, experience, general reputation and fairness in fairness in all transactions

 Every merchant banker should maintain copies of balance sheet, Profit and loss account, statement of financial position. Half-yearly unaudited result should be submitted to SEBI. Merchant bankers are prohibited from buying securities based on the unpublished price sensitive information of their clients.

MERCHANT BANKING REGULATIONS :

Certificate from SEBI is a must.

They are of four types:

Category I merchant bankers : Can act as Issue managers Category II merchant bankers : Can act only as co-managers Category III merchant bankers : Can act as co-managers but cannot undertake portfolio management Category IV merchant bankers :can merely act as consultant or advisor to issue of capital CAPITAL ADEQUACY NORMS :

Category I
Category II

: Rs. 5 crores
: Rs.50 lakhs

Category III : Rs.20 lakhs Category IV : Nil

Role of Merchant Banks in IPO

When a company wants to raise funds through initial public offering (IPO) it appoints an investment bank for underwriting the issue.
An Investment bank is also called as merchant bank. There is no regulatory restriction to use the services of a merchant bank for IPO. Since in an IPO a company participates for the first time, it doesnt have complete understanding of the rules and documentation, required to be submitted, to get a clearance from the regulator.

Pre-Issue Duties of Merchant Bankers

1. 2. 3. 4. 5. 6. 7. 8. Documents to be submitted to SEBI Appointment of Intermediaries Underwriting Offer documents to be made public Appointment of Compliance Officer Mandatory Collection Centers Final Offer Document Application Forms

9.
10. 11. 12.

Minimum Application Amount

Listing of Securities Period of Subscription Over-subscription

Post-Issue Duties of Merchant Bankers

Redressal of Investor
Co-ordination with the Intermediaries Stock Invest

Underwriters
Bankers to an Issue Post-Issue Advertisement Basis of Allotment Compliance with Guidelines on Advertisement

State Bank of Indias Merchant Banking Services

The investment banking subsidiary of State Bank of India, SBI investment banking subsidiary of State Bank of India, SBI Caps is an old player in the capital market. It is the pioneer in starting Merchant Banking Division. Starting off with merchant banking and project appraisals, it soon expanded its range of banking and project appraisals.

SBI Caps offers services in the broad areas of mergers and acquisitions, project in the broad areas of mergers and acquisitions, project advisory, structural finance, and capital

 In M&A, for instance, it offers advice on privatization, business valuation, instance, and restructuring.
In the capital markets, it handles public and rights offers, private placements and buybacks, while project advisory involves handling core sectors such as power and telecom. It has also been exploring new avenues like securitization.

Axis Banks Merchant Banking Services

Axis Bank launched its Acquiring business from December 15, 2003. Currently, the Bank has an installed base of more than 1,97,000 terminals and we are adding 2500 merchants per month, the highest in the industry today.

They are the market leaders in this segment with their merchants banking on them for their entire end to end payment solution.

Why is Axis Bank one of the top merchant banks ?

Axis Banks Investment Banking business comprises activities related to Equity Capital Markets, Mergers and Acquisitions and Private Equity Advisory. The bank is a SEBI -registered Category I Merchant Banker and has been active in advising Indian companies in raising equity through IPOs, QIPs, and Rights Issues etc. During the financial year ended 31st March 2012, Axis Bank undertook 9 transactions including 5 IPOs and 2 Open Offers.

Conclusion
In spite of problems popping up, merchant banking in India has vast scope to develop because of lot of domestic as well as foreign businesses booming here. Indian economy provides an amicable environment for these firms to set up, flourish and expand here.

Bibliography
www.wikipedia.com
www.google.com www.axisbank.com www.scribd.com www.sebi.gov.in www.sbi.co.in