Merchant Banking Services Market Expected to Reach $232.2 Billion by 2032—Allied Market Research

According to a new report published by Allied Market Research, titled, “Merchant Banking Services Market, by Type (Portfolio Management, Business Restructuring, Credit Syndication, and Others), Provider (Banks, and Non-Banking Institutions), and End-user (Businesses, and Individuals): Global Opportunity Analysis and Industry Forecast, 2023-2032." The merchant banking services market was valued at $42.1 billion in 2022, and is estimated to reach $232.2 billion by 2032, growing at a CAGR of 18.9% from 2023 to 2032.

A merchant bank is a financial institution that conducts underwriting, loan services, financial advising, and fundraising services for large corporations and high-net-worth individuals. Moreover, Merchant bank services also involve structured trade finance and debt funding. Structured trade finance is a well-adopted alternative to conventional lending, especially in emerging nations, to enable import-export transactions. Debt funding enables public and private companies to raise funds by issuing corporate debentures.

Furthermore, the high rate of adoption by merchant banking services among HNIs and an increase in demand for foreign investments are boosting the growth of the global merchant banking services market. In addition, the increase in the use of digital transformation technology is positively impacting the growth of the merchant banking services market. However, the high cost of merchant banking services and increasing security concerns are hampering the merchant banking services market growth. On the contrary, rising Innovations in the Fintech Industry is expected to offer remunerative opportunities for the expansion of the merchant banking services market during the forecast period.

Depending on the end user, the business segment holds the largest merchant banking services market size owing to the rising adoption of merchant banking solutions among SMEs. However, the individual segment is expected to grow at the highest rate during the forecast period, The segment's growth can be attributed to the building and execution of investment strategies to meet specific investment objectives.

Region-wise, the merchant banking services size was dominated by North America in 2022 and is expected to retain its position during the forecast period, owing to rising geographic expansion of merchant banking service companies across the region. However, Asia-Pacific is expected to witness significant growth during the forecast period, owing to the growing capital market and a substantial number of key merchant bank service providers in the region.

COVID-19 outbreak had a significant impact on the growth of the merchant banking services market, owing to the lockdowns and restrictions on the movement of people and goods, which disrupted the asset management industry. The uncertainties of the pandemic drove the prices of all asset classes, including stocks, bonds, and commodities, to low levels. The pandemic also resulted in innovations and exposed investors to new trading and investing methods using algorithms and robo-advisors, creating direct competition. Moreover, temporarily shrank risk appetites also meant rising participation in passive investing through Exchange Traded Funds (ETFs). These elements are expected to burden the revenue trajectory of the global merchant banking services market over the forecast period. However, as respective governing authorities begin to lift these enforced lockdowns, the global merchant banking services market has recovered accordingly.

With alarming increase in COVID-19 patients, various governments have implemented lockdown, which significantly reduced the number of vehicles on roads, which, in turn, increased the number of digital services and access of premiums. Furthermore, with rise in digitization among the end users, the demand for blockchain technology increased to reduce the load on the mining servers and reduce transaction delay with rising digital transaction during the pandemic. Small and large-scale investors resorted to the safety of capital temporarily in the uncertain environment induced by the coronavirus. Merchant bank services heavily depend on a risk-on economic climate and can be vulnerable to economic uncertainties and downturns with high redemptions. Merchant banks assist companies in being listed on stock exchanges, also known as Initial Public Offering (IPO). IPO management responsibilities include conducting due diligence, appointing intermediaries, filing requisite documents, advertising, calculating issue size, and redressal of investor grievances. The recent surge in IPO participation is a direct factor contributing to the growth of merchant banking services. For instance, in August 2021, OYO Hotels and Homes, a SoftBank-backed hospitality company, announced that the company had hired a minimum of three merchant banks, including JPMorgan Chase & Co., Kotak Mahindra Capital Company, and Citigroup Inc., to raise $1.2 billion by launching its initial public offering (IPO). Thus, a number of such initiatives across the globe are anticipated to provide lucrative opportunities for the expansion of the merchant banking services market trends.

Key Findings of The Study

• By type, the business restructuring segment accounted for the largest merchant banking services market share in 2022.
• Region wise, North America generated highest revenue in 2022.
• Depending on provider, the banks segment generated the highest revenue in 2022.

The key players profiled in the merchant banking services market analysis are U.S. Capital advisors LLC, JPMORGAN CHASE & CO., Bank of America Corporation, DBS Bank Ltd., NIBL Ace Capital Limited, MORGAN STANLEY HSBC Bank USA, Citigroup Inc., The Goldman Sachs Group, Inc., and Wells Fargo & Company. These players have adopted various strategies to increase their market penetration and strengthen their position in the merchant banking services industry.