Financial Analysis. Lesson 37. Investment Banking and Capital Raising

Financial Analysis. Lesson 37. Investment Banking and Capital Raising

1. Investment banking assists companies in raising capital and issuing securities.

2. Initial Public Offering (IPO) is the first sale of shares to the public.

3. Follow-on offering issues additional shares after an IPO to raise capital.

4. Underwriting involves investment banks guaranteeing the sale of newly issued securities.

5. Book building collects investor interest to determine security price and allocation.

6. Private placement sells securities directly to select investors, bypassing public markets.

7. Debt capital markets (DCM) specialize in raising funds through debt instruments.

8. Equity capital markets (ECM) help raise funds by issuing equity securities.

9. Roadshow is a series of presentations to attract investor interest pre-IPO.

10. Prospectus provides detailed information about a company and its offering.

11. Capital raising involves obtaining funds to finance corporate projects and growth.

12. Rights issue allows existing shareholders to purchase additional shares at a discount.

13. Bridge financing is temporary funding until permanent financing is secured.

14. Mezzanine financing combines debt and equity, often for leveraged buyouts.

15. Convertible bonds are debt instruments that can be converted into shares.

16. Syndicated loan is a large loan provided by multiple financial institutions.

17. High-yield bonds are higher-risk bonds offering greater returns to investors.

18. Market making ensures liquidity by quoting buy and sell prices for securities.

19. SPAC (Special Purpose Acquisition Company) raises capital to acquire a target company.

20. Dual listing lists company shares on multiple exchanges to increase liquidity.

21. Fairness opinion assesses if a transaction’s terms are fair to stakeholders.

22. Green bonds finance environmentally sustainable projects with attractive tax benefits.

23. Leveraged finance funds acquisitions using high levels of debt.

24. Recapitalization adjusts a company's capital structure to improve financial stability.

25. Debt restructuring renegotiates terms to make debt repayment more manageable.

26. Financial sponsor provides capital, often for private equity or buyouts.

27. Lead manager oversees a transaction’s structuring, pricing, and distribution.

28. Lock-up period prevents insiders from selling shares immediately post-IPO.

29. Venture capital invests in early-stage companies with high growth potential.

30. Exit strategy outlines how investors will divest their holdings profitably.

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Technical Examples:

1. Underwriting ensures investment banks take on risk in capital raises.

2. Prospectus informs potential investors of risks and opportunities in an offering.

3. Bridge financing provides temporary capital to companies in transition.