Advantages of investment banking

An investment bank is a financial entity that assists individuals and companies in raising capital through making investments and engaging in the stock exchange. They enable business professionals and entities to find the most profitable investments, as well as maintaining them in the long term.

Why engage in investment banking

Investment banks not only underwrite and issue securities but they can act as agents for them. Many individuals and companies acquire the services of investment banks for the underwriting and issuance of these securities.

Investors seek the services of investment banks as they specialize in the field of investing, providing specific services such as market marking, trading of derivatives, fixed income commodities and equity securities. Additionally, these specialized banking institutions assist companies in their mergers and acquisitions; facilitating and overlooking the entire process.

The main services that investment banking is used for, include;

  1. Trading and promoting securities: the cash or other securities are traded in transactions. This is commonly known as facilitating transactions or market making. These securities are promoted by their investment bank. This is done through underwriting and research as it is the “selling” side of investment banking.
  2. Dealing with investors: managing individuals and companies in regards to their investment; whether it is pension funds, hedge funds, or mutual funds. This is considered the “buying” side of investment banking.

Investment banking provides a platform for investors to build and maintain their investments as they have teams of experienced professionals who offer knowledgeable insights into the stock exchange. Additionally, they have the expertise in terms of investing in the most profitable areas in different industries. Therefore, individuals and companies are advised to seek the services of an investment bank as they can benefit from up-to-date and expert insights in investing money and raising capital.