文档介绍：Investment Banking
Securities Underwriting
Investment Banking
Investment banking: involves activities related to underwriting and distribution new issues of debt and equity securities
Investment Banking
Primary Markets: Newly issued securities
Raise new capital for the firm
Agents (investment banks) create a public market for the client’s securities
Secondary Markets: Previously issued securities
Market makers facilitate trading of previously issued securities
Trades through agency transactions match buyers and sellers (ie. brokers operating through an exchange like the NYSE)
Trades through principal transactions – institutions trading on their own account a (taking a long or short position in a security)
Primary Market Choices
Financing choices available to the firm:
Venture capital
Private equity
Bank financing (loans)
Private security issuance (fewer than 35 investors)
Public issue of securities
Investment bank focus
on items (4) and (5), underwriting issuances
but are also increasingly engaged in (1) and (2), taking positions in private firms on behalf of their customers or on their own account
Types of Public Security Issuances
There are several different ways in which a firm can raise capital in public markets, including:
Initial Public Offering (IPO): A private firm issues publicly traded shares for the first time
Seasoned Equity offering (SEO): An already public firm issues new shares, again.
Carve-out: A corporation issues shares in a subsidiary to the public
Spin-off: Firm issues all subsidiary shares to current shareholders of the firm
Fixed e: Debt issuances (corporate bonds)
Direct Public Offering (DPO): Shares are offered direct to public shareholders
Questions that highlight the differences between each type of offering:
Is capital being raised by the firm?
Is this the first time raising capital in public markets?
What type of security is being issues (debt/equity)?
Who is the original owner of the firm (entrepreneur, public firm)?
Types