The Merchant Banking Services Market generated a revenue of USD 43.26 billion in 2022. The market is estimated to expand at an astronomical CAGR of 16.8% over the forecast period, to attain market revenue of USD 238.77 billion by 2033.
Merchant banking services have a huge role in the development of any country’s economy. Merchant banking services include loan syndication, portfolio management, project and issue management, corporate advice, mutual funds, and non-resident investment advice. Merchant banking act as a conduit for distributing concerns.
With the help of these services, enterprises can safely venture out into international markets. Merchant banking services help in expanding capital markets and improving investment climates.
The growing deployment of merchant banking services to secure the financial system of the country is projected to expand market development over the forecast period.
The demand for merchant banking services is rising on account of the increasing number of expanding international businesses. Further, the rise in demand for Foreign Direct Investment (FDI) and trade finance activities are facilitating new opportunities for merchant bankers in emerging economies.
The market is set to witness strong growth as a result of new strategies employed by industry players. For instance, the nationalized bank merchant institutions have also commenced with the setup of separate subsidiaries, to effectively meet the surging demand for broad-spectrum financial services from the corporate sector.
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The market is likely to be negatively affected by the high costs associated with merchant banking services, which makes them costly in comparison to traditional banking services.
Additionally, merchant banking services are inaccessible to the masses, since their services are restricted to wealthy individuals only. These rich people are commonly called high net worth individuals (HNWIs), who meet the standard of least asset size requirements.
Further, merchant banking services do not guarantee success and have associated risks. In addition to this, based on business clients, merchant banks do not assist in raising funds for start-ups.
| Attributes | Details |
|---|---|
| Merchant Banking Services Market Value (2023) | USD 50.53 billion |
| Merchant Banking Services Market Forecast Value (2033) | USD 238.77 billion |
| Merchant Banking Services Market CAGR (2023 to 2033) | 16.8% |
The market attained a market revenue of USD 43.26 billion in 2022. The market growth in the historical period has been governed by several factors, including surging trade financing, fundraising, and the recent increase in IPO participation.
By 2033, the market is estimated to attain USD 238.77 billion, expanding at a CAGR of 16.8% in the stipulated time frame. Future Market Insights inspects the latest trends shaping the market during the given time duration:
| Year | Expected Valuation |
|---|---|
| 2025 | USD 68.93 billion |
| 2028 | USD 109.84 billion |
| 2032 | USD 204.42 billion |
The market, in the forthcoming years, is projected to be driven by rising merchant banking operations globally. The merchant bankers are operating as promoters of industrial firms. Merchant bankers help enterprises formulate ideas, prepare feasibility reports, identify projects, and fetch government incentives and approvals.
In addition to this, merchant bankers advise clients, chiefly consisting of institutional investors, about investment decisions. Wide adoption of these services the world over, the market is projected to be pushed forward in the coming years.
Based on services, the business restructuring segment is projected to head the merchant banking services market over the forecast period. Business restructuring service is employed to modify management and operations to better align with corporate plans and invigorate them to yield more profits.
For example, restructuring business operations to utilize debt in an environment with low-interest-rate may be more feasible than disbursing equity.
Additionally, merchant banks help in complex restructurings like demergers and spinoffs to procure business value. Several benefits of business restructuring are projected to boost their demand over the forecast period.
The credit syndication segment is a considerably growing segment in the merchant banking services industry. Credit syndication combines debt with a solitary lending source, a consortium, or a financial institution.
The expanding deployment of merchant banks for credit syndication can be credited to its capacity to decrease the debt amount and enhance balance sheets. In addition to this, merchant banks help unite foreign and local currency loans.
Based on service providers, the banks are projected to dominate the market over the next 10 years. The banks in total hold a large share of the merchant banking services market. The segment is being pulled by the large scale of operations.
Further, banks are entrusted with their ability to optimally utilize resources and funds to yield maximum return on investments. In addition to this, banks are under strict regulations, as a result leaving less room for oversight.
The segment of non-banking institutions is projected to exhibit significant growth in terms of CAGR over the stipulated time frame. Non-banking institutions segment comprises investment firms, private companies, or proprietary ownerships.
The frequently used non-banking institutions, besides investment firms, is insurance and hedge funds companies. The main distinguishing feature of non-banking entities is that they assist in procuring capital, but are not entirely licensed to be considered as banks, hence not allowed to accept deposits.
The business segment is anticipated to lead the market during the forecast period. The segment growth of businesses can be attributed to the many business clients deploying merchant banking services.
These businesses include pension funds, global corporates, government institutions, and charity organizations. The surge in demand for merchant banking services by business clients for active portfolio management to reduce the risk and create a return on equity.
Additionally, the advisory services and consulting provided by merchant banks may help businesses in evaluating the cost and advantages of projects to estimate the payback period. Consequently, the demand for merchant banking services from businesses is projected to rise.
The individual segment is predicted to witness significant growth over the upcoming years. Merchant banks fundamentally help HNIs with portfolio management. These services consist of buying and selling primary securities contained in their portfolio while adjusting to evolving market conditions.
The individual segment is projected to be driven by the creation and implementation of investment strategies to meet certain investment objectives.
The North America merchant banking services market is projected to hold a dominating share of the global market. The region is densely populated with global companies like Tesla, Apple Inc., and Google, which are operating across the globe. Additionally, the region is observing significant exertion by local companies to enter new markets.
This can be illustrated by Panatonni, which is a real estate development company, which entered the India market in July 2022. The North America market is further being driven by the developed business environment and strong capital market in the region. market in July 2022.
North America market is further being driven by the developed business environment and strong capital market in the region.
The Asia Pacific merchant banking services market is predicted to emerge as a significant market, in terms of CAGR, in the next decade. The market growth can be ascribed to an increase in income levels, favorable demographics, and expanding regional businesses.
According to the global Foreign Direct Investment (FDI) Annual Report, the Asia Pacific region witnessed an increase of 17% in the FDIs in Greenfield projects in the year 2021. The leading merchant banking service providers like JPMorgan Chase & Co. have widened their scope of offerings in the Asia Pacific region to tap into the potential opportunity. Greenfield projects in the year 2021.
The leading merchant banking service providers like JPMorgan Chase & Co. have widened their scope of offerings in Asia Pacific region to tap into the potential opportunity.
The Europe merchant banking services market is driven by the growing demand for truly embedded finance offerings. Several merchant banks providing high professional standards, long term commitment, and transparent practices in the region, are pushing the market growth.
Increasing demand for long-term success and significant growth from high-value businesses and individuals is anticipated to yield industry expansion. Merchant banking services are being sought to offer cutting-edge digital banking services rooted in regulatory expertise.
According to Statista Research Department, the combined wealth of High-Net-Worth Individuals (HNWIs) in Europe amounted to about USD 17.46 trillion in 2020. In the same year, the United Kingdom, Germany, and France were the top three countries with HNWIs. The surging HNWIs in the region are pushing the market development in the Europe region.
The merchant banking services industry is a fragmented market. The leading players are actively investing in expansion initiatives, research and development, joint ventures, strategic partnerships, and mergers and acquisitions.
As a result, the market is witnessing intense competition. The strategic initiatives portray an effort to launch new services and products and expand over untapped geographies. The market offers high-growth avenues for market players, to expand over the forecast period.
Vendors providing merchant banking services serve particular institutional and high-value, retail clients. The transactions processed by these vendors are usually high in value and rarely frequent in volume, subject to the economic situation. The merchant banks are introducing additional services to branch out new offerings.
| Attributes | Details |
|---|---|
| Forecast Period | 2023 to 2033 |
| Historical Data Available for | 2018 to 2022 |
| Market Analysis | USD million/ billion for Value |
| By Product | Portfolio Management, Business Restructuring, Credit Syndication, Others |
| By Application | Banks, Non-banking Institutions |
| By End User | Businesses, Individuals |
| By Region | North America; Latin America; Europe; Asia Pacific; The Middle East and Africa |
| Key Countries Covered | The United States, Brazil, Mexico, Canada, the United Kingdom, Germany, France, Spain, Italy, Russia, Argentina, Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam, Australia, Poland, China, New Zealand, Japan, GCC countries, South Africa, others |
| Key Players | The USA Capital Advisors, LLC; JPMorgan Chase & Co.; Bank of America Corporation; DBS Bank Ltd.; NIBL Ace Capital Limited; Bryant Park Capital; Morgan Stanley; CREDIT SUISSE GROUP AG; HSBC Bank USA, N.A.; Royal Bank of Canada Website |
The market is pegged to achieve USD 50.53 billion in 2023.
The market is expected to expand at a CAGR of 16.8%.
In future, the market is expected to attain USD 238.77 billion by 2033.
Increasing demand for consultancy services and expanding international businesses.
Financial advancements are cropping up new opportunities in the marketplace.
Merchant Banking Services Market
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