Loan syndication is a product offered in institutional banking that involves multiple lenders who fund various portions of a loan for a single borrower. These multiple lenders form a syndicate to provide a borrower with the requested capital who may wish to fund mergers, buyouts, capital expenditure projects or acquisitions. The borrowing requirements of some businesses who may include large businesses, corporates and multinationals, are sometimes beyond the funding and credit risk or underwriting capacity of single lender.
Loan syndication is typically organised by an institutional bank who may negotiate, structure, arrange and/or underwriting and distributing syndicated loan facilities. Depending on which bank is the 'lead bank', the bank would oversee the arrangement of a loan syndication or securities underwriting. They also would offer the suggestions on flexible structure, terms and conditions of the loan as well as coordinating diligence, information memorandum, co-coordinating investor presentations or roadshows, sales process and liaise with legal for the syndicate.