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and those that have capital. Hence they facilitate the flow of capital in the market.
Changing role of a merchant banker
In the past…
The role of the merchant banker was to arrange the necessary capital and ensure that
the transaction would be implemented i.e. a financial intermediary facilitating the flow of
capital among the concerned parties.
Today…
A merchant banker plays multiple roles which include those of an entrepreneur, a
management advisor, an investment banker, and a transaction broker.
This shows that the breadth and depth of a merchant bankers activity has changed over
the years.
Services offered: The wide gamut of services offered by a merchant banker include:
Issue management- this forms the ‘Bread and Butter’ operations for most merchant
bankers. The main area of service involves:
• Instrument designing
• Pricing of the issue
• Registration process for the issue of shares
• Underwriting of the issue
• Marketing efforts
• Final allotment to investors
• Listing details on stock exchanges
Conclusion
The merchant banker plays a vital role in channelizing the financial surplus of the
society into productive investment avenues. Hence before selecting a merchant banker,
one must decide what are the services for which he is being approached. Selecting the
right intermediary who has the necessary skills to meet the requirements of the client
will ensure success.