#THE SYNDICATE PROJECT UPDATE#

Some of the projects demand so many types of expertise that a single entity cannot fulfill on its own. In such a situation different companies for a syndicate to share the risk. Often a particular project comes with a high level of risk attached to it, but at the same time, the potential of profitability of the project is high. Syndicates are mainly formed to serve two purposes to share the risk and to pool the resources and expertise. If the risk is too high for a single insurance firm to handle, that company may form a syndicate to share the risk and profit of the insurance policy. The underwriter would then evaluate the potential risk of insuring the asset and determine the price. Suppose a company wants to insure its large asset. Insurance companies evaluate the risk of insuring a person or asset to determine the price of the policy. Insurance Syndicateįorming syndicate is a common practice in the insurance sector to share insurance risk among several firms. Syndication is an important part of the venture capitalist community. Venture Capitalist firms form syndicates to co-invest in an investee firm and share a joint pay-off. There are other types of the syndicate which are not temporary. The syndicate dismantles after 30 days of the completion of the sale or if the stocks cannot be sold at the offering price. These stocks are issued jointly by the syndicate and the bank that leads the endeavor is known as the syndicate manager. The investment banks form a syndicate to issue new stocks in public. This kind of syndication is common in the US where corporates own the finance sector. These loans are underwritten by a bank syndicate. Finance Syndicateīanks often come together to lend a large amount of money for a specific purpose and to a single debtor.

A syndicate can be formed nationally and internationally. Internet companies also tend to form business syndicates often with direct competitors. Syndicate is very common in the real estate industry where several real estate companies come together to form a syndicate for developing a large real estate project. Large companies form syndicates to strengthen their market position. Syndicates are often formed by the companies who share a common interest in the market but are not direct competitors. Usually, companies working in the same sector form a syndicate to operate jointly for a venture that is risky as well as profitable. They share their resources and expertise and also share the potential risk associated with the project. Two or more companies may form a syndicate to handle a specific project. Back To: BUSINESS TRANSACTIONS, ANTITRUST, & SECURITIES LAW What are some types of Syndicate? Business Syndicate Syndicates can be formed in different sectors including business, finance, insurance, media, and even crime. Syndicates are generally considered to be corporations or partnership for tax purpose. These large transactions are difficult to be handled by a single entity, thus they form a syndicate to pool their resources and share risks.

#THE SYNDICATE PROJECT UPDATE#

Update Table of Contents What is a Syndicate? What are some types of Syndicate? Business Syndicate Finance Syndicate Insurance Syndicate Purpose of forming a syndicate Academic Research on Syndication What is a Syndicate?Ī syndicate is a temporary self-organizing group of two or more individuals, companies, corporations or entities formed to handle a large transaction and to promote a shared interest.

The syndicate project