The functional role played by investment banks in Hony Capital’s entrepreneurial process

In the process of Hony Capital’s investment and entrepreneurship, the main functional role played by the investment bank is to maintain the capital chain.

In the capital market, because the initial capital allocation is often ineffective, there are those with capital surpluses and those with capital shortages. Those with capital surpluses hope to use the funds on hand to obtain greater profits, while those with capital shortages Investors hope to raise the necessary funds at the lowest cost to pursue development.

This requires a specialized financial institution to assume the role of a financing intermediary that communicates between the supply and demand sides of funds and helps match funds. Therefore, both investment banks and commercial banks objectively play such a role.

But compared with commercial banks, investment banks are a direct credit method, that is, they can recommend to investors fundraisers that issue stocks or bonds, and can also find suitable investment opportunities for investors.

But fundamentally speaking, investment banks do not serve as a media for fund transfer, and do not directly enter into contractual relationships with investment and financing parties. Instead, they help one party find or match a suitable other party. In the end, both parties to the fund directly touch.