An investment bank is a kind of financial institution that performs the function of investment banking but may also have many other finance related activities including sales and trading of various financial instruments, equity research, asset management and more.
Investment banks primarily help clients raise money through debt and equity offerings. This includes raising funds through Initial Public Offerings (IPOs), credit facilities with the bank, selling shares to investors through private placements, or issuing and selling bonds on behalf of the client.
The investment bank serves as an intermediary between investors and the company and earns revenue through advisory fees. Clients want to utilize investment banks for their capital raising needs because of the investment bank’s access to investors, expertise in valuation, and experience in bring companies to market.
Often, investment banks will buy shares directly from the company and will try to sell at a higher price – a process known as underwriting. Underwriting is riskier than simply advising clients since the bank assumes the risk of selling the stock for a lower price than expected. Underwriting an offering requires the division to work with Sales & Trading to sell shares to the public markets.
Islamic finance refers to the means by which corporations in the Muslim world, including banks and other lending institutions, raise capital in accordance with Sharia, or Islamic law. It also refers to the types of investments that are permissible under this form of law.
Central to Islamic banking and finance is an understanding of the importance of risk sharing as part of raising capital and the avoidance of riba (usury) and gharar (risk or uncertainty).
A sukuk is an Islamic financial certificate, similar to a bond in Western finance that complies with Sharia, Islamic religious law.
An international organization that issues guiding principles and standards within the banking, insurance and capital market sectors in order to promote stability in the Islamic financial services industry. The ISFB consists of:
- The general assembly, which includes all members of the ISFB
- The council, which acts as the policy making body of the IFSB and includes the senior executive of each full member of the organization
- The technical committee, which advises the council on issues and consists of up to 15 persons appointed by the council
- The working group, which drafts standards and guidelines and reports to the technical committee
- The secretariat, which acts as the permanent administrative body and is headed by a secretary-general appointed by the council
Based in Kuala Lumpur, Malaysia, the IFSB began operations in early 2003. The IFSB issues standards and principles in the areas of capital adequacy, corporate governance, risk management and transparency, among others.
The goal of the IFSB is to promote the awareness of issues that could have an impact on the Islamic financial services industry. It issues Sharia-compliant standards, holds conferences and seminars, and provides guidance and supervision, among other initiatives.
- Mergers and Acquisitions (M&A) - advisory on sale, merger and purchase of companies
- Equity Capital Markets (ECM) services and products such as IPOs, shares, capital raises, secondary offerings etc.
- Debt Capital Markets (DCM) - advice on raising and structuring of debt to finance acquisitions and other corporate activities
- Providing mutual fund & other fund services for their customers
- Valuation, listing and issuing securities in Initial Public Offerings (IPOs)
- Process of listing and required permits and authorizations for offerings
- Process of securities assignment
- Investment affairs
- Listing securities in regulatory exchanges and doing all administrative affairs as the agent of issuer
- Financial and organizational restructuring for companies
- Other services companies require regarding their new investments, development, improvement, planning, budgeting and securities pricing
- Marketing and managing the process of securities assignment
- Fulfilling administrative affairs in listing and requiring permits for offering securities as an agent of companies
- Designing and offering financial instruments services
- Brokerage services & Broker-dealer services
- Asset management services
- Market making
- Drawing support of banks, financial and insurance institutes for companies in underwriting their securities
- Assisting companies for obtaining credit and financial resources