The investment banking market comprises establishments primarily engaged in undergoing capital risk in the process of underwriting securities. This market excludes companies acting as agents and/or brokers between buyers and sellers of securities and commodities. These establishments primarily involve in underwriting, originating, and/or maintaining markets for issue of securities.
The top five companies covered are Barclays PLC, JP Morgan, Goldman Sachs, Bank of America Merrill Lynch and Morgan Stanley. Barclays PLC was the largest company in the investment banking market in 2017.
The countries covered are USA, China, Germany, Brazil, Japan, UK, Spain, Russia, France, Australia, Italy, India and rest of the world.
The global investment banking market was valued at around $80 billion in 2017. North America was the largest region in the investment banking market in 2017, accounting for under 52% market share. The USA was the largest country in the market in 2017, accounting for 32% market share.
Investment banks across the globe are moving towards businesses requiring less regulatory capital. In this regard, major investment banks from around the world such as Barclays, Deutsche Bank and Credit Suisse have announced their plans to move from traditional underwriting business to other activities such as mergers and acquisitions advisory and fundraising. This shift is primarily due to regulatory changes that made some investment banking activities more expensive than the others. Although the regulations have restricted the range of some banks, forcing them to specialize, some investment bankers, such as Citibank and JPMorgan have continued offering a complete range of investment banking services.
The investment banking market is segmented into Mergers & Acquisitions Advisory, Debt Capital Markets Underwriting, Equity Capital Markets Underwriting and Financial Sponsor/Syndicated Loans.
Mergers and Acquisitions Advisory services include helping companies in identifying and implementing opportunities to merge with or acquire other businesses. This includes financial planning and fundraising, tax and legal support and other allied activities and advisory services. Investment banks have a strong presence across various countries to aid their clients to meet their strategic goals. Investment banking companies either charge clients fixed fees or a proportion of the deal value.
Debt Capital Markets Underwriting service is the capital underwriting process through which investment bankers raise debt capital from investors on behalf of clients such as companies, regular bankers and governments that are issuing debt securities. This includes activities such as fixing the coupon rate and number of bonds to be offered based on the market, based on demand for an entity’s bond by assessing current and future prospects. Investment banking companies either charge clients fixed fees or proportion of the security’s value.
Equity Capital Markets Underwriting service is the capital underwriting process through which investment banks raise equity capital from investors on behalf of companies. This includes activities such as fixing equity pricing and the number of equities to be offered based on appetite for an entity’s equity. Equity flotations can be either initial public offerings (IPOs) or rights issues of companies which have already been publicly floated. Investment banking companies either charge clients fixed fees or a proportion of the security’s value.
Financial Sponsor/ Syndicated Loans services include finding lenders to finance large projects. The borrower can be a company, or government. The loan can be of fixed amount, credit line or a combination of both. Investment banking companies either charge clients fixed fees or a proportion of the loan value.