Capital Market Services
The financial services industry has witnessed a phase of rapid transformation driven by disruptive technologies such as Smart Contracts, Automation, Blockchain, and Artificial Intelligence. A vast number of factors include increasing costs, shrinking revenues, and capital market compliance adds further to the challenges.
Customer’s in today’s time demands a vibrant ecosystem of value-added services and a holistic capital and asset management solutions. These need a complete reconfiguration of core systems that will enable competitive advantage and sustenance in the long run. Globally, many companies are adopting an alert and experience-centric capital market and asset management solutions.
For a company to meet its short and long term objectives, access to the capital to fund the expansion and operations is crucial for a company. Capital can be raised in many other ways aside from simple bank financing, such as:
- Securitization and Structured Finance Arrangements
- Initial Public Offerings
- Private Placements, i.e., debt or by way of equity.
These transactions can be highly complex and must be planned carefully and executed with great attention to the needs and concerns of the shareholders, both internal and external. Proper due diligence and preparation in structuring the deal and related accounting implications are critical for success. Hence, for adequate structuring and drafting of strategies, you need to get Capital Market Services. At Enterslice, we have capital market specialists who will provide you with the best capital market services.
What is Capital Market?
Capital market is considered as a market where the buyers and sellers engage in trade of financial securities like stocks, bonds, etc. The buying and selling process is undertaken by the participants, such as individuals and institutions.
The capital markets channelize all surplus funds from savers to institutions, which are then invested into productive use. Generally, the trading of this market is done for long-term securities.
The capital market consists of primary markets and secondary markets. Primary markets deal with the trade of new issues of stocks and other securities, whereas the secondary market deals with the exchange of existing or previously issued securities. Another essential division in the capital market is made based on the nature of security traded, i.e., stock market and bond market.
What is the Capital Market Services Provided by Banks?
The capital market services provided by banks are as follows:
Lead-Manager to the Public Issue
The bank will take the responsibility of completing all the legal and regulatory formalities, including the drafting of the Prospectus for the public issue and also will manage all the affairs related to the public issue.
As a lead manager for capital market services, the bank obtains the entire requisite permission from different authorities, arranges for appropriate publicity of the issue, liaises with the stock exchanges and brokers, and prints and distributes application forms, etc. A company can avail of all the services by paying a hefty amount of fees.
Advisor to the Issue
On many occasions, the companies retain the banks for advising on a particular service required by them for public issues. The banks perform this job against a number of fees for the provided services.
Banker to the Issue
To distribute share application forms to potential investors, the banks function as bankers to the public issue to the potential investors in all parts of the country for the purpose of capital market services. The share application forms are duly filled and signed by them together with the application fees in the banks' branches acting as banker to the issue.
The branches of banks collect the cheques and other instruments deposited by the investors. After closing the issue, they will remit the funds to the leading share issue account of the company. For some significant investments, several banks are appointed as bankers to the issue, and one of them is designated as the primary banker to the issue.
The application fees that are collected by the different banks are put together in the main account for a public issue that is released to the company after the completion of the regulatory formalities that includes the permission from the Securities and Exchange Board of India (SEBI). The bankers to the issue charge a certain amount of fee for the application handled by them.
The banks also function as brokers in some issues. They make necessary arrangements to list the share with the stock exchange and arrange for its trading in the stock exchange from a specific date. The banks earn brokerage from the designated companies and the corporate as a broker. Moreover, the banks also enjoy the benefit of a substantial amount in the relative account for the public issue.
Dividend and Interest Paying Bank
Banks having their branches all over are the essential vehicle for payment of dividends or interest by the corporation. The companies that have borrowed funds from the public by way of accepting the fixed deposits and issuing debentures, bonds, etc., on which they are asked to pay interest within a specified time frame. The company earning profits pays dividends to its shareholders.
Sometimes the companies are not equipped enough to pay the dividend or interest to the investors directly. The beneficiaries of the dividend and interest are spread all over the country, and the companies are not efficient enough to pay the dividend or interest directly to the investors. They enter into an arrangement with the bank to issue dividends or interest warrants drawn on that bank, favouring the shareholders or other lenders investing in fixed deposits bonds, etc.
The bonds are sent to the beneficiaries by the companies with the help of their Registrars. After paying the dividend or interests, the branches send the instruments to the bank branch with whom the company had initially made the arrangement.
The banks often underwrite the whole or part of the public issue by a company. Through underwriting, the bank gives assurance to the company to subscribe to the issue if the investors do not fully accept the issue. In the full absence or the investors' required subscription, the underwriting bank has to put its own application to purchase the shares before the closing of the issue.
This has also been termed as 'Development of the Issue.' For the purpose of this function, the banks underwriting the issue earn significantly in the form of underwriting commission. After the closure of the issue and listing the shares in the stock exchange, the banks can dispose of the shares at a price quoted in the stock exchange. The supply-demand position in the stock exchange determines the price in the Stock exchange. This is also known as the secondary market.
What is the Advantage of Capital Market Services at Enterslice?
Enterslice’s capital market services offer you a lot of benefits, such as:
Expertise is one of the largest providers of management and administration services to the capital market transactions; we have an experienced, talented staff with the best experience in the industry. This permits you to focus on strategic goals rather than daily management of transactions.
We offer a wide range of capital market services to our clients.
Single Point Contact
We provide access to both the experienced team and professionals acts as a single point of contact for coordination.
Enterslice is not tied with any financial institution, tax, law, or accounting firm. Our independence assures that the interests of our clients are put first.
We offer comprehensive services with a presence in all the major financial hubs that are supported by an extensive footprint.
What are the Areas of Expertise in Capital Market Services?
The areas of expertise in capital market services are as follows:
Investment Banking Services
From broad loans to import solutions and integrated receivables, capital market services offer universal, strategic advice and solutions that bring a significant difference in their client's future.
Mergers and Acquisitions
Capital market services groups help their clients with their most crucial and complex business issues, such as mergers and acquisitions. Usually, this type of expertise comes from experienced firms that will leverage their long-established industry relationships and specialized insights to ensure that every merger or acquisition transaction is maintained.
Debt Capital Markets
Capital market services help companies raise capital and assemble financing through a wide range of sophisticated solutions. Generally, headed by senior-level bankers with the long-standing industry, these teams help the companies structure and execute financing solutions.
Equity Capital Markets
Capital market services help companies develop the organization and execute equity offerings such as IPO's and convertible notes.
We act as a loan service provider for borrowers and lenders who wish to access the capital markets.
Project Finance Services
The demands and challenges that are natural in long term project financing can be met by us. We have a dedicated team of experienced loan and project finance professionals with in-depth knowledge of dealing with various lenders, commercial lenders, supporting the project before and after financial close.
We offer a wide range of capital market services to administer and manage securitizations, covered bonds, and structured finance transactions for various types of assets. We have a well-established network of international relationships with the leading legal and tax advisors' structured finance industry.