An Overview of Corporate Finance and Investment Finance Advisory in India


Any business decision that involves the use of money is a business financial decision that has financial implications. A financial market cannot function effectively if the professionals associated with it are unable to provide valuable information to those who need it. This is a major problem when new securities are issued and sold or purchased by different companies. Corporate finance firms and investment banks leverage their skills in these situations by providing their clients with an environment where information can be produced and applied by acting as intermediaries between investors and clients. They provide a marketplace that facilitates information-sensitive transactions. Investing in businesses must be done wisely and the right kind of combination of financing and return on investment must be found. Transactions in which capital is raised for the development, growth or acquisition of businesses are called corporate finance. Recent changes in regulatory standards provide for the organization and financing of highly leveraged transactions. Previously, the investment banking industry was dominated by a very small partnership and most of the revenue came from the commission on the purchase of floating securities which was made on behalf of the client. Investment banks have morphed into huge full-service corporations that generate much of their revenue from technical trading activities.

business Finance

Corporate finance refers to an area that deals with the financing of capital structure and management actions that offer companies to increase the value of the company. Financial resources are analyzed, prioritized and distributed using corporate finance tools.[1] Maximizing the value of the company is the ultimate goal of corporate finance which is done through the planning and implementation of resources and the balance between risk and profitability. The capital structure of a company plays a huge role in maximizing the value of a company. The capital structure may contain a combination of long-term and short-term debt. The risk on the company’s capital financing is determined on the basis of the ratio between the liabilities and the company’s equity. The most indebted company is considered to have a riskier capital structure, but risk taking is one of the main reasons for a company’s growth and success. The term corporate finance also includes the term investment banking. Assessing a company’s financial needs to raise capital that matches business needs is one of its functions.

Corporate finance is different from managerial finance in that all sorts of financial issues are dealt with under corporate finance. Financial management is exclusively a matter of managerial finance. The term company is used in corporate finance as a generic way to refer to any business, large or small, related to manufacturing or services. Investments in a business are generally referred to as assets and are often classified as fixed assets or current assets. High-growth companies maximize their value with the help of yet-to-be-made investments and raise funds from different sources.[2] The sources can be the investors or the financial institutions who are promised a fixed claim on the cash flows generated by the assets. This is called debt. Debt can be in the form of money from a bank loan or bonds issued by a publicly traded company. They also offer investors a double claim known as cash flow interest and a right to play a role in the running of the business.

Corporate Finance Advisory Roles

Professionals who work in corporate finance and provide assistance to service businesses, accounting firms, and law firms are called corporate finance advisors. Other names associated with this are financial advice, transaction advice, transaction advice, services, etc. execution expertise and advice related to finance is provided under Corporate finance. They help in mergers and acquisitions of public and private partnership companies and also help in reviewing business strategies. Merger refers to two companies becoming one by shareholding. Acquisition means complete takeover by one company. These transactions are negotiated by advisors to protect the interests of the client. Negotiating an agreement acceptable to both parties is also one of the tasks associated with the business finance advisor. They may also have to analyze cost savings and find ways to finance transactions between companies. They must work with financial market anticipation and deal with regional and national laws to complete a transaction.

investment bank

Investment banks are the organizations that raise capital through corporate actions in the debt and equity markets for other businesses. They also help coordinate the execution of corporate mergers and acquisitions. They are known to provide services in performing complex financial analysis.[3] Investors who need to invest money in the business and companies that need capital to grow are brought together by investment banks who act as intermediaries and guide them by providing services such as underwriting, mergers and acquisitions and advisory services. Investment banks also offer services such as sales and trading, equity research, asset management, including commercial and retail banking. Modeling and valuation are the key skills required for investment banking. Building financial models to advise clients in valuation methods and complement them is one of the main activities performed by investment banks. When establishing ownership rights becomes hard work, investment banking adds value to the asset transaction. They facilitated complex transactions by creating a market where informal property rights in assets could be enforced and created.

Investment banking advice

The main way for a company to raise capital is through issuing stocks and bonds. This requires expertise in scaling up financial instruments and navigating regulatory requirements. Investment banks can have a crucial role to play. They advise businesses and governments on how to deal with financial challenges that help secure financing in the form of equity offerings, bond issues or derivatives. Advice is provided by investment bankers who take into account the current investment climate and recommend ways to raise funds in the most advantageous manner. They help determine the price of instruments using financial models. To offer bonds, banks will look at the prevailing interest rate and find a way to compensate borrowers.[4] Investment banks are the ones that document what needs to be submitted to the Securities and Exchange Commission before the company sells stock. They must compile information about the management and ownership of the business and its plans for moving forward.

Another source from which these banks generate their income is providing recommendations to other businesses on whether or not to buy a business. They arrange reports and execute stock and bond transactions on behalf of their clients. Asset management is also one of the main functions performed by large investment banks that deal with debt securities, real estate, pension trusts, fund foundations and other investment vehicles .

Investment Banking versus Corporate Finance

A well-accepted distinction between the roles of corporate finance and investment banking is that the corporate finance professional must manage the day-to-day financial operations and manage the short and long-term goals of a business. , while an investment banking advisor may have a soul. focus on raising capital for a company. An investment banker is able to manage his private institutions and conduct mergers and acquisitions between companies. The main task of an investment banking firm is growth, while corporate finance deals with running the operation in an orderly manner. Investment banking professionals also need higher college degrees and corporate finance advisory experience. [5]

Corporate finance has a broader scope and can be considered a part of corporate finance. Although it is a subfield, investment banking can be termed as a separate field. Indeed, it requires a specialized approach and specialized knowledge relating to the facilitation of fundraising activities. In investment banking, pitch books and memorandum are prepared, while in corporate finance, financial reports of a company are generated. The operations of an organization that enable it to make decisions relating to investing and raising capital are done by corporate finance whereas, in investment banking, the activities of other companies are also worrying because they will help raise capital.


The expansion of the equity market by removing controls on the conditions and pricing of capital issues has had a major impact on the financial sector worldwide. For this reason, corporate financing models have shifted towards greater equity financing. In India, the changes brought about by the sixth plan had emphasized the increase in private investment which will be the vector of growth. In the private sector, investment activity plays a central role in the country’s economic performance. Market forces in India have implications on the allocation of funds and govern the availability and cost of funds affecting the state of business investment.

In the 1990s, financial sector reforms led to a shift in corporate finance, where new capital issues were an important source of funds as opposed to the borrowings of the previous period. Thus, equity financing declines in a more efficient form than debt financing, and a strong relationship between corporate financing and investment behavior has been observed. The information technology revolution has also led to great change, as traditional skills have become codified and massive cost savings have become possible. Investment banks began to turn human capital intensive businesses into boutique homes using fortification and computerization.

Comments are closed.