Merchant banking is a form of private equity investment activity conducted by financial holding companies (FHCs) in the US. Typically, it involves investments in the unregistered securities of publicly or privately held companies that are engaged in business activities unrelated to the FHC's core banking and financial services activities. Under its merchant banking authority, FHCs can make investments in up to 100% of a target company's ownership interests. This is in contrast to other forms of permissible private equity investments by banking organizations, which are generally subject to strict ownership percentage limits. Merchant banking investments can be held for up to 10 years (with the possibility of extension) before the FHC is required to sell or otherwise divest itself of the investment. For more information, see Practice Note, Private Equity Investments by Banks (Merchant Banking).