Sample interview questions: Can you explain the concept of capital raising and how it relates to investment banking?
Sample answer:
Capital Raising:
Capital raising refers to the process through which companies, governments, or other entities obtain funding from various sources to meet their financial needs.
Investment Banking’s Role:
Investment banks play a pivotal role in facilitating capital raising activities, acting as intermediaries between entities seeking funds and those willing to provide them.
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Channel for Fundraising:
Investment banks serve as channels for companies, governments, and other institutions seeking to raise capital. Companies may need capital for expansion, product development, acquisitions, or other business strategies. -
Structuring and Due Diligence:
Investment banks assist in structuring the appropriate capital raising strategy based on the client’s needs and objectives. They conduct thorough due diligence to assess the client’s financial health, business prospects, and potential risks. -
Advisory Services:
Investment banks provide advisory services to help clients navigate the capital raising process. This includes evaluating different funding options, such as equity, debt, or hybrid financing, and selecting the most suitable approach aligned with the client’s specific situation. -
Marketing and Underwriting:
Investment banks often act as underwriters, assuming the risk of selling securities to investors. They conduct marketing campaigns to promote the securities to potential investors and price them appropriately to attract sufficient demand. -
Execution and Distribution:
Investment banks facilitate the execution of capital raising transactions by coordinating with various parties involved in the process, such as investors,… Read full answer