Merchant banking services: Loan syndication

Credit syndication also known as credit procurement and project finance services. The main task involved in credit syndication is to raise to rupee and foreign currency loans with the banks and financial institutions both in India and abroad. It also arranges the bridge finance and the resources for cost escalations or cost Overruns.

Broadly, the credit syndications include the following acts;

(a) Estimating the total costs

(b) Drawing a financing plan for the total project cost-conforming to the requirements of the promoters and their collaborators. Financial institutions and banks, government agencies and underwriters.

(c) Preparing loan application for financial assistance from term lenders/financial institutions/banks and monitoring their progress including the pre-sanction negotiations.

(d) Selecting the institutions and banks for participation in financing.

(e) Follow-up of the term loan application with the financial institutions and banks and obtaining the satisfaction for their respective share of participation.

(f) Arranging bridge finance.

(g) Assisting in completion of formalities for drawl of term finance sanctioned by institution expediting legal documentation formalities drawing up inter-se agreements etc. prescribed by the participating financial institutions and banks.

(h) Assessing the working capital requirements.

Preparing the necessary application for a successful issue management the close liaison and coordination with the various constituents of the public issue is an essential condition that warrants full cooperation of all the parties affecting the cost and prospects of the issue. Merchant banks, acting as ‘Manager’ to the issue has to settle the fee for Advocate/solicitors’ advice, accountants certification, broker’s and banks charges, underwriters’ commission, printers’ charges and advertising and publicity expenses and coordinates with syndicated merchant bankers and principal brokers, stock exchanges, etc. The responsibility for all this rests upon the merchant banker. If proper coordination is not done, the success of the issue may be rendered unassured.