If you want to enter the finance world, you must understand the types of investment banking. This topic helps you know how different investment banks work and what services they offer. Investment banking is a broad area, and it has many types based on the size of the bank, the clients it serves, and the services it provides. Some banks work with governments and big companies. Others help startups or work on only one type of deal. Investment banks handle deals like IPOs, bond issues, company buyouts, and financial planning. These banks do not deal with savings or personal loans. They only focus on business needs. Some banks work globally, while others focus on local markets.
Download Types Investment Banking CompaniesWhat is Investment Banking?
Investment banking is a special area in finance. It helps big companies, governments, and rich individuals manage money, raise funds, or buy and sell businesses. Investment banks do not take deposits or give personal loans. Instead, they help companies grow, invest, and expand.
These banks offer services like IPO handling, mergers and acquisitions, debt raising, and advisory. They also help manage risk, give expert advice, and handle stock and bond trading for clients.
Investment banking plays a big role in business. Without it, companies may struggle to get money or make smart deals. These banks connect people who need funds with people who want to invest.
Different Types of Investment Banking Based on Services
You can divide investment banking into different types based on the services the bank offers. Some banks offer many services. Others offer only one or two. Each type is useful and supports a certain kind of client or deal.Understanding service-based types helps you know what banks do and which services are in demand.
Let us now explore the different types based on services offered.
1. Mergers and Acquisitions (M&A)
These banks help companies buy or merge with others. They plan the deal, study company values, and guide both sides to complete the transaction.
- They help find the right company to buy.
- They study the market and decide if the deal makes sense.
- They manage legal papers and approval steps.
- They make sure both sides agree to fair terms.
This type is common for big firms, tech companies, or global deals.
2. Underwriting and Capital Raising
Banks help companies raise funds through share sales (equity) or loans (debt). They manage the pricing, paperwork, and investor talks.
- They help during IPOs and follow-on public offers.
- They sell bonds to raise debt money.
- They build trust with investors to get fast fund flow.
This type supports companies that need money to grow.
3. Equity Research
These banks study company data, market trends, and industry reports. They write reports for investors and help them decide which stocks to buy or sell.
- They do deep analysis on company strength.
- They give “Buy,” “Sell,” or “Hold” advice.
- They guide fund managers and retail investors.
This service supports smart investment.
4. Sales and Trading
Some banks buy and sell shares, bonds, and other assets for clients or for themselves. They act fast, follow market moves, and aim to make a profit.
- They trade in stock markets, foreign exchange, and commodities.
- They help clients buy or sell at the right time.
- They manage risk by hedging positions.
This is a fast-moving and profit-focused part of investment banking.
Types of Investment Banking Based on Client Size
Some investment banks choose clients based on their size. Big banks handle top global firms. Smaller banks help startups or medium firms. This creates different types of banks based on the client level. Understanding this helps students choose which kind of bank to join and what kind of work they will do.
1. Bulge Bracket Banks
Bulge Bracket Banks are the world’s largest and most influential investment banks. They offer full-service financial solutions including M&A advisory, IPO underwriting, asset management, and trading. These banks operate globally and cater to large corporations, governments, and institutions.
- Examples: Goldman Sachs, JPMorgan Chase, Morgan Stanley.
- They work with Fortune 500 companies, governments, and global investors.
- They offer IPO, M&A, trading, research, and asset management.
These banks are top players and have large teams.
2. Middle-Market Banks
Middle-Market Banks serve mid-sized companies, offering advisory services, capital raising, and mergers and acquisitions support. They handle smaller deals compared to bulge bracket banks but provide more personalized services. These banks operate mainly at a regional or national level.
- Examples: Jefferies, Houlihan Lokey, Rothschild (in some regions).
- They work with firms that earn ₹100–500 crore per year.
- They offer M&A, advisory, and fundraising.
They give more personal attention and serve growing firms.
3. Boutique Investment Banks
Boutique Investment Banks are specialized firms that focus on specific sectors or services like M&A advisory or restructuring. They usually do not offer a full range of banking services like larger banks. These firms often provide expert, personalized advice for niche or complex deals.
- Examples: o3 Capital (India), Unitus Capital, Moelis & Company.
- They work with startups, family businesses, or specific sectors.
- They give deep, focused advice.
These banks are flexible and offer custom plans.
Types of Investment Banking Based on Geography
Another way to divide banks is based on where they operate. Some banks work only in one country. Others have offices across the world. Knowing this helps in planning a job or dealing with a specific bank.
1. Domestic Investment Banks
Domestic investment banks operate within one country. They focus on local companies and laws. They offer services like IPO advisory, debt syndication, and M&A within the national economy. These banks have strong knowledge of local regulations, industries, and investor behavior. Examples in India include ICICI Securities, Kotak Investment Bank, and SBI Capital Markets.
- Examples: SBI Capital Markets, ICICI Securities (India).
- They help with Indian IPOs, M&A, and government projects.
- They know Indian rules, taxes, and market needs.
They play a key role in regional economic growth.
2. International Investment Banks
International Investment Banks operate across multiple countries, offering global financial services like cross-border M&A, international IPOs, and global asset management. They cater to multinational corporations, governments, and institutional investors. These banks help clients access capital markets worldwide and manage complex global transactions.
- Examples: Credit Suisse, Deutsche Bank, Barclays.
- They help Indian companies raise funds abroad or buy global firms.
- They work with foreign investors who want to invest in India.
These banks need strong teams and global knowledge.
Download Types Investment Banking CompaniesTypes of Investment Banking FAQs
- What are the main types of investment banking? Main types include M&A, capital raising, trading, equity research, and advisory. There are also types based on client size and geography.
- Which is the best type of investment banking for beginners? Middle-market or boutique banks offer more learning and exposure for beginners.
- What are bulge bracket banks? These are the biggest investment banks that handle billion-dollar deals globally.
- Are boutique banks good for careers? Yes. They offer focused work, faster growth, and closer client interaction.
- Can investment banks work globally? Yes. Many top banks have offices in major world cities and handle international deals.
