Merger and Acquisition Of Merchant

banking In India

PRESENTED BY : ROLL NO

• SNEHAL 01
• RUPALI 14
• ANUSHRI 31
• KIRAN 32
• SHWETA 59
 Merchant Banking - Definition

• Merchant Banking is an activity that includes corporate finance

activities such as advice on complex financings, merger and
acquisition advice (international & domestic) and at times direct
equity investments in corporations by the Banks.

• Merchant Banks are financial institutions providing specialist

services which generally include the acceptance of bills of

exchange, corporate finance, portfolio management and other

banking services.
 Merchant Banking

• In India, Merchant Bankers is a body who carries on any

activity of the issue management which consist of preparing
prospectus & other information relating to the issue.

• They assist corporate in raising capital.

 Origin Of Merchant Banking

• Merchant Banking originated through entering of London

merchants in foreign trade through acceptance of bill.

• Later the merchants assisted the government of under

developed countries in raising long terms through floatation of
bonds in London money market.
 Merchant Banking In India- Post
Independence

• In 1967, RBI issued its first merchant banking license to grind

lays which started with management of capital issues,
production planning, system design and market research.

• In 1970, Citibank setup its merchant banking division.

• In 1972, SBI started its merchant banking division.

 Organizational Setup Of Merchant Banking
in India

• Institutional Base
• Banker Base
• Broker Base

• Private Base
 Merchant Bank vs Investment Bank
Merchant Banks
• Expand in the field of
securities underwriting.
• Focus on small scale
companies and offer creative
equity financing, bridge and
mezzanine financing.
• Provide service to small and
medium institutes.
Investment Banks
• Participate in trade financing
activities.
• Focus on IPO’s and large
public and private share
offerings.
• Provide service to larger
institutes.
 Services Provided By Merchant Banks
“ The merchant bankers help industry and trade to raise funds, and the
investors to invest their saved money in sound and healthy concerns with
confidence, safety and expectation of higher yields.”

1. Corporate Counseling

- It covers the entire field of merchant banking activities.

2. Project counseling

- It includes project report preparation, decision regarding

financing pattern & project report appraisal.

3. Credit Syndication

-Assistance is rendered to raise loans for projects .

4. Advisory Services Relating To Mergers & Takeovers

-Merger : combination of two or more companies into a singe

company where one survives and other loses its existence.
Takeover : purchase by one company acquiring controlling
interest in the share capital of another company.
5. Relief to Sick Industries
- Sick industries : those units which perform poorly against
expected results, incur cash losses for consecutive years,
gradually erode the entire net worth and obviously fail to service
the debt obligations.
6. Issue Management
- It involves marketing of corporate securities by offering them to
public.
7. Underwriting of Public Issue
- Underwriting is an insurance to the company which makes public
issues.
8. Portfolio Management

- It refers to maintaining proper combination of securities in a

manner that they give maximum return.

9. Non-Resident Investment
- Merchant banker provides investment advisory services to NRI.
 SEBI Regulation

 Compulsory Registration:

• Category I: merchant bankers carry on any activity relating to issue

management
• Category II: merchant bankers can act as advisor, consultant co-
manager, underwriter, portfolio manager
• Category III: merchant bankers can act as an underwriter, advisor and
consultant to an issue
• Category IV: nil
 Problems & Hurdles

• Industry Compartmentalization

• Malafide Practices

• Regulation
 Scope Of Merchant Banking In India

• Size and dynamics of the market

• Restriction – Liberalization
• Banking policies
• Corporate culture
• Corporate dynamics
 Conclusion  

• Merchant Banks & Investment banks sound the

same but are totally different.
• Provide advice & guidelines to its client.
• All India Merchant Banks are under the check of
SEBI.
• Has evolved through the age.
Thank You!