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INTRODUCTION:Merchant banks are considered as the original banking institutes that came into being during the middle Ages. It was hundreds of years ago that the Jews introduced the concept of merchant banking in Italy. With the evolution of economic terms and practices, merchant banking services they are differentiated from those of an ordinary bank. Today, merchant banks are regarded as the banks of corporate house and organizations. Ordinary banks provide services to common people, but merchant banking serves a number of needs and requirements of organizations and businesses. The fact that merchant banks are the wholesale banks specifies the use of these banks for some important purposes. The two important functions they would perform included providing credit and underwriting. 2. MEANING OF MERCHANT BANKING:A merchant bank is a financial institution that engages in underwriting and business loans, catering primarily to the needs of large enterprises and high net worth individuals. In the British market, the term merchant bank refers to an investment bank. 3. DEFINITION OF 'MERCHANT BANK':A financial institution that specializes in services such as acceptance of bills of exchange, hire purchase or instalment buying, international trade financing, long-term loans, and management of investment portfolios. Merchant banks also advise on (and invest own funds in) acquisitions, mergers, and takeovers. The nearest US equivalent is an investment bank

4. THE FUNCTIONS OF MERCHANT BANKING:1. Raising Finance for Clients: Merchant Banking helps its clients to raise finance through issue of shares, debentures, bank loans, etc. It helps its clients to raise finance from the domestic and international market. This finance is used for starting a new business or project or for modernization or expansion of the business. 2. Broker in Stock Exchange: Merchant bankers act as brokers in the stock exchange. They buy and sell shares on behalf of their clients. They conduct research on equity shares. They also advise their clients about which shares to buy, when to buy, how much to buy and when to sell. Large brokers, Mutual Funds, Venture capital companies and Investment Banks offer merchant banking services. 3. Project Management: Merchant bankers help their clients in the many ways. For e.g. advising about location of a project, preparing a project report, conducting feasibility studies, making a plan for financing the project, finding out sources of finance, advising about concessions and incentives from the government. 4. Advice on Expansion and Modernization: Merchant bankers give advice for expansion and modernization of the business units. They give expert advice on mergers and amalgamations, acquisition and takeovers, diversification of business, foreign collaborations and joint-ventures, technology up gradation, etc. 5. Managing Public Issue of Companies: Merchant bank advice and manage the public issue of companies. They provide following services: Advise on the timing of the public issue. Advise on the size and price of the issue. Acting as manager to the issue, and helping in accepting applications and allotment of securities. Help in appointing underwriters and brokers to the issue. Listing of shares on the stock exchange, etc. 6. Handling Government Consent for Industrial Projects: A businessman has to get government permission for starting of the project. Similarly, a company requires permission

for expansion or modernization activities. For this, many formalities have to be completed. Merchant banks do all this work for their clients. 7. Special Assistance to Small Companies and Entrepreneurs: Merchant banks advise small companies about business opportunities, government policies, incentives and concessions available. It also helps them to take advantage of these opportunities, concessions, etc. 8. Services to Public Sector Units: Merchant banks offer many services to public sector units and public utilities. They help in raising long-term capital, marketing of securities, foreign collaborations and arranging long-term finance from term lending institutions. 9. Revival of Sick Industrial Units: Merchant banks help to revive (cure) sick industrial units. It negotiates with different agencies like banks, term lending institutions, and BIFR (Board for Industrial and Financial Reconstruction). It also plans and executes the full revival package. 10. Portfolio Management: A merchant bank manages the portfolios (investments) of its clients. This makes investments safe, liquid and profitable for the client. It offers expert guidance to its clients for taking investment decisions. 11. Corporate Restructuring: It includes mergers or acquisitions of existing business units, sale of existing unit or disinvestment. This requires proper negotiations, preparation of documents and completion of legal formalities. Merchant bankers offer all these services to their clients. 12. Money Market Operation: Merchant bankers deal with and underwrite short-term money market instruments, such as: Government Bonds. Certificate of deposit issued by banks and financial institutions. Commercial paper issued by large corporate firms. Treasury bills issued by the Government (Here in India by RBI). 13. Leasing Services: Merchant bankers also help in leasing services. Lease is a contract between the lessor and lessee, whereby the lessor allows the use of his specific asset such as equipment by the lessee for a certain period. The lessor charges a fee called rentals.
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14. Management of Interest and Dividend: Merchant bankers help their clients in the management of interest on debentures / loans, and dividend on shares. They also advise their client about the timing (interim / yearly) and rate of dividend.

5. YES BANK'S MERCHANT BANKING:YES BANK's Investment Banking group is involved in the identification, structuring and execution of transactions for its clients in diverse industries and geographies. Some of the typical transactions include mergers & acquisitions, divestitures, private equity syndication and IPO advisory.

At YES BANK, they seek to provide their clients with the widest possible range of opportunities including the Management of Equity, Capital Restructures of Advisory and Equity Capital transactions. They also offer a range of merchant banking and equity placement services.

Their unique knowledge based approach to banking enables them to provide a range of services designed to meet their clients' specific needs, thereby ensuring that they consistently deliver high quality advice and service to all their clients. This customer-centric approach allows them to offer a high level of customization for their clients, making them their Preferred Partners.

6. YES BANKS PUBLIC ISSUE MANAGEMENT:Securities and Exchange Board of India vide its circular no. CIR/MIRSD/1/2012 dated January 10, 2012 has mandated that certain information with respect to track record of the public issues managed by a merchant banker in the past 3 years should be disclosed on the theybsite of the Merchant Banker. Information on Public Issues listed after January 1, 2009 is given as below: Public issues- Debt: India Infrastructure Finance Company Ltd Muthoot Finance Limited - NCD Issue I Muthoot Finance Limited - NCD Issue III Religare Finvest Ltd Public issues- Equity: A2Z Maintenance & Engineering Services Ltd C. Mahendra Exports Ltd

7. YES BANKS PRODUCTS AND SERVICES:At YES BANK, they provide their customers with knowledge-driven, industry-specific solutions that are customized to best suit their business needs. As a result, they have identified certain sunrise sectors with high growth potential. Their dedicated teams of Bankers for each of these segments are also industry experts who offer in-depth and invaluable insights into business. Some of their key focus sectors include Food & Agri-business, Life Sciences & Biotechnology, Telecommunications and Information Technology. They look to develop a long-term advisory and banking relationship to provide the entire gamut of services to their clients. Therefore, they offer their clients customized products at various points in their business life cycles. Their Investment Banking group offers the following range of products to their clients:
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Private Equity Syndication : Raising venture and growth capital: - venture capital is financial capital provided to early-

stage, high-potential, high risk, growth start-up companies.

Structured investment/convertible products- Structured investment is a form of

investment that can potentially bring about higher returns, compared to other investment products. Structured investments are often linked to the performance of various underlying assets such as interest rates, foreign exchange, equities, fixed income instruments or market indices.

Mezzanine Financings- A hybrid of debt and equity financing that typically is used to

finance a company's expansion. Mezzanine financing is basically debt capital that gives the lender the right to convert to an ownership or equity interest in the company if the loan is not paid back in time and in full.

Buyouts by financial sponsors- A financial sponsor is a term commonly used to refer to

private equity investment firms, particularly those private equity firms that engage in leveraged buyout transactions.

Financial Advisory:

Comprises of advisory assignments with respect to:

Mergers and acquisitions:- The combining of two or more companies, generally by

offering the stockholders of one company securities in the acquiring company in exchange for the surrender of their stock. Where as An acquisition or takeover is the purchase of one business or company by another company or other business entity.

Divestitures: - The partial or full disposal of an investment or asset through sale,

exchange, closure or bankruptcy. Divestiture can be done slowly and systematically over a long period of time, or in large lots over a short time period.

Joint ventures: - when two or more persons come together to form a temporary

partnership for the purpose of carrying out a particular project, such partnership can also be called a joint venture.

Spin-offs: - a type of corporate transaction forming a new company or entity.

Equity Capital Markets:

Comprises of advisory assignments with respect to:

IPOs: - An initial public offering (IPO) or stock market launch is a type of public offering

where shares of stock in a company are sold to the general public, on a securities exchange, for the first time.

Open offers/right issue: - A secondary market offering that is similar to a rights issue in

which a shareholder is given the opportunity to purchase stock at a price that is lower than the current market price.

Private placements: - is a funding round of securities which are sold not through a public

offering, but rather through a private offering, mostly to a small number of chosen investors.

Share buy backs: - is a funding round of securities which are sold not through a public

offering, but rather through a private offering, mostly to a small number of chosen investors.

Restructuring & Privatizations:

Includes advisory on:

Capital restructuring: - Altering the capital structure of a firm; in reaction to the changed

business conditions, or as a means to fund the firm's growth plans.

Distressed debt: - Distressed securities distressed-debt investment is securities of

companies or government entities that are either already in default, under bankruptcy protection, or in distress and heading toward such a condition.

Leverage buy outs: - A leveraged buyout is when a company or single asset is purchased

with a combination of equity, plus, significant amounts of borrowed money -- structured in such a way that the target's cash flows or assets are used as the collateral to secure and repay the money borrowed to purchase the target-company/asset.

Brokerage Services:

Comprises of secondary placement of equity with institutions.

8. THE YES BANK ADVANTAGES:Key Strengths Excellent track record: Their core Investment Banking team has built an excellent track record in their focus sectors. Their product knowledge is complemented with a superior understanding of the sector, which not only facilitates the origination of business but also ensures effective delivery. Their services are characterized by: Proactive generation of ideas Value-added, senior level involvement High quality and efficient service Trusted knowledge-based advice An innovative, result-oriented approach that helps in origination, successful execution and retention of their clients Credibility with Financial Investors: Their team has assiduously built credibility with most of the large and active private equity investors in the country. These relationships provide the team with early and prompt feedback on the prospects of a transaction, resulting in quicker turnaround times for their clients.

Relationships with legal and tax firms: They have also developed outstanding relationships with the top legal and tax firms in the country, helping us to provide valueadded advice to their clients. An intricate knowledge of the strengths of various legal and tax firms with regard to various product offerings results in judicious selection of partners for deal execution. This results in smoother closure of the transaction and also enhances the transaction benefits for their clients. Cross Border Relationships: They are in the process of building strategic alliances with boutique investment firms based in Asia, Europe and the U.S. These relationships will be driven either by sectoral expertise or the strong geographic presence that these firms may have built over time. With India becoming one of the important investment destinations for
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both corporate and investors, and Indian companies' increasing focus on the global markets, particularly in the automotive and healthcare industries, the potential for cross border transactions has increased manifold. To date, their Investment Banking team has successfully completed thirty three transactions comprising M&A, private equity and capital market transactions across a wide range of sectors such as Engineering, Food&Agri Business, Financial Services, Pharmaceuticals, Textiles, Technology, Auto Components and Real Estate.

09. YES BANKS DEALS: PRIVATE EQUITY PLACEMENTS:-

MERGER AND ACQUISITIONS:-

 CAPITAL MARKET TRANSACTIONS: Equity Capital Market Issuances-

FCCBs & NCDs-

Acquisition financing-

Buyback and Delisting:-

Public Offers-

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10. INVESTMENT BANKING AWARDS & ACCOLADES Transactions advised by YES BANK have won Deal of the Year award at the prestigious Global M&A Advisors Awards for 3 consecutive years (2008, 2009 and 2010) Most recently, UPL's acquisition of Sipcam Isagro Brazil was declared as "Deal of the Year in the Global M&A Advisors Awards held in New York in Oct 2011 (YES BANK was the advisor to UPL for this transaction) YES BANK won the Green/Environmental Deal of the Year award in 2009 across Asia, Middle-East, Africa and Oceania region

11. 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, 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. It can be said that this project helped us to understand about YES BAKs Merchant Banking and its customised products and services. Hence, Merchant Banking can be considered as essential financial body in Indian financial system.

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