Investment Houses are individuals or organizations that are engaged in investment banking and financing activity. There are different kinds of investment houses, depending upon the type of financial activities they choose to involve with. Some of them serve the role of brokerages for shares and stocks, while others act as short term and long term investors in different businesses and asset classes such as real estate. Some investment houses act purely as financiers, and do not involve in the day to day running or decision making activities of the business. But nowadays many investment houses choose engage actively with the firms in which they put in their money.
Support provided by Investment Houses
In many cases, the investment houses maintain a flexible approach in terms of the involvement and support they provide to their partner enterprises. If the investor believes that there is a natural synergy of knowledge and expertise between him and the entrepreneur, he may increase his involvement in the business in order to add value to it. But where the investor is convinced by the strength of the company’s business project, even when he does not possess any personal expertise in that area, he may choose to remain a sleeping financial partner in the venture.
In some cases, the investment house may provide consultation and advisory support to the business. The team of members at the investment house is generally comprised of highly experienced and knowledgeable people with expertise in different areas. They are able to provide useful advice to the business at crucial junctures. In some other cases, the investment house may involve itself more aggressively with the development of business. Such engagement may lead to the creation of a joint venture, partnership, merger or acquisition, or any other form of strategic alliance between the investor and the company.
Some investment houses even engage in the sales and marketing of high value products and services of the business through their contacts and network. The collaborative arrangements differ from one company to another, depending upon the matching of needs and strengths between the investor and the company. However, in most cases, there is a clear understanding between the investment house and the partner that there will be no fight for controlling stake of the company, and the key control and management of the company will remain with the entrepreneur only.
Corporate Social Responsibility of Investment Houses
Many large investment houses believe in making meaningful efforts that benefit the society at large, in addition to making profits for the investors. Such investment houses operate on the following cardinal principles of business:
- They choose to make investments only in such companies that are sincere in their commitment to uphold the highest business ethics and principles of doing business. However attractive the business proposition may be, but if it does not conform to the highest ethical standards, the investment house may choose to disregard that investment opportunity.
- Investment houses, in many cases, try to take care that the shareholders’ interests are protected by the management under all circumstances. Fair and transparent human resource policies, honest dealings with creditors and bankers, and commitment to the customers and suppliers of the business are some of the pre-requisites of business that the investor expects the partner to follow.
- Equal opportunity employment principles, commitment to quality and delivery for consumers, respect for legal and ethical obligations of the business, environment friendly approach of the business, adequate emphasis on innovation and research, and corporate philanthropy and volunteerism are some of the basic tenets that the investment houses expect the partner companies to adhere to.
Liaison with Governments at a Local and National Level
Due to the diversified nature of investments that the investment houses make in a country, it is common for them to maintain cordial and cooperative relations with the officials in various government departments. They maintain relations with departments and officials at the municipal, provincial and federal level especially in areas are relevant to their investments.
Some investment houses even engage in assisting their business partners to make sales to government departments and public sector undertakings. These are usually large projects, and the experience and connections of the investor can sometimes produce very fruitful results for the business. In some cases, the investment houses hire professional consultants and contractors who are specialists in generating governmental support and even grants for specific projects.
For the entrepreneurs it is a huge opportunity to get the backing of such large and influential investment houses because it helps in realizing their business goals.
Popular Areas under the Scanner of Investment Houses
At present, many investment houses are keen on investing in new and revolutionary technologies that hold a promise to make a real difference towards the growth and development of the society and the economy. In particular, green technology based businesses are attracting the attention of a large number of investment houses. Entrepreneurs and companies that offer innovative ideas for clean energy and environment friendly products and services are of special interest to the investment houses.
The other traditional areas of high interest for the investors include administrative services, business and financial services, real estate development and management, healthcare industry, travel industry, and media and telecom industry. The investment houses see a major growth potential in these business areas in the near future.