What is Investment Banking ?
Investment bankers provide corporate advisory services as part of commercial banks themselves or in separate firms associated with banks. They deal with new issues of securities for raising finance, take-overs, mergers and acquisitions, financial advisory services for mergers and acquisitions, capital and debt structuring and restructuring, private capital raising and structured financing.
Most investment banks deal with three main areas:
– Mergers and acquisitions (M&A): assisting clients with expansion in order to increase profitability, safeguard market position, diversify, etc. Investment bankers manage the transaction process, assessing the target organisation and the impact of the deal. This involves knowledge of legal and regulatory issues.
– Debt capital markets: working with lenders such as financial institutions, agencies and public and private companies to support client debt. This includes restructuring debt, refinancing debt and raising new debt.
– Equity capital markets: advising clients on ways to raise capital, how much, from whom and when.
What do I have to do ?
An investment banker raises money for the company if its promoter approaches him to do so. The company then becomes his client. The investment banker will get a ‘success fee’, which is a percentage of the money raised. This fee varies from 1% to 5%.
Investment Banks help companies and governments issue securities, assist investors purchase securities, manage financial assets, trade securities and provide financial advice. Investment banks need to be flexible, and innovative with good client-handling skills.
They compete with banks in securing good accounts naturally with less interest. They also seek out new areas which are risky but promise high returns. One such area is the vast non-performing assets (NPAs) lying with banks. They sift and pick out NPAs which may become good accounts two years down the line. Apart from loan syndication services, investment bankers also help raise capital for corporates, by accessing the commercial marketplace – IPOs, AD , GD etc. On behalf of their clients, they interact with and win over the investing public.
Investment banking is a high-risk, high-reward profession. It also means a lot of hard work. You need to be constantly networking with other professionals. Much depends on your ability to communicate with clients and get deals through.
What should I study ?
Preference is given to professionals who have completed their MBA, Chartered Accountancy, Masters in Finance Control, Financial Engineering or Chartered Financial Analyst. Most banks conduct their own orientation and training programmes. You may pursue a Certified Investment Banking (CIB) course or a Diploma / Certificate course in Banking.
What are the prospects ?
The Indian equity market is experiencing one of the best bull periods driven by economic buoyancy, increased corporate profits, high FII inflows, stable government policies, low interest rates and increased business and industry confidence. Investment banking is also looking up, particularly in risk management, mergers and amalgamations, loan and equity syndication and financial advisory. With its reputation for high profile deals and substantial rewards, investment banking is one of the most sought-after destinations for ambitious new MBAs and CAs around the globe.
Successful financial professionals can expect careers in investment banking with major investment banking firms and also in corporate strategic planning, risk management, primary and derivative securities valuation, financial information systems management, portfolio management and securities trading. These positions are relatively highly paid ones. Other employers are public sector undertakings, financial corporations, business firms, export agencies, commercial undertakings, insurance, private companies, management consultancies, etc. Some of the well known investment banks are HSBC, Merril Lynch, Polaris, ING Vysya, GE capital, TCS, Kotak Investment Banking, ICICI, ANZ Grindlays Bank etc.
Where should I study ?
The following Institutes offer MBA / Post-graduate Diploma in Management, with Finance as a specialisation :
Indian Institutes of Management, Ahmedabad, Bangalore, Calcutta, Indore, Kozhikode, Lucknow
FMS, Delhi University, Delhi www.fms.edu/
Narsee Monjee Institute of Management Studies, (deemed university) V.L. Mehta Road, Vile Parle (W) Mumbai – 400056. Website:www.nmims.edu
Jamnalal Bajaj Institute of Management Studies, Mumbai. www.jbims.edu
Management Development Institute (MDI), Gurgaon. www.mdi.ac.in
T. A. Pai Management Institute (TAPMI), Manipal. www.tapmi.edu.in
S. P. Jain Institute of Management & Research, Mumbai. www.spjimr.org
Jaipuria Institute of Management, Lucknow. www.jiml.ac.in
Institute of Management Technology, Ghaziabad. www.imt.edu
Xavier Institute of Management, Bhubaneswar. www.ximb.ac.in
Symbiosis Institute of Business Management, Senpati Bapat Road, Pune. www.sibm.edu
Other Finance related courses
Dept. of Financial Studies, University of Delhi, South Campus, Benito Juarez Road, New Delhi 110021. www.mfc.edu
Course : Masters in Finance and Control (MFC)
Indian Institute of Finance, New Delhi 110052. www.iif.edu
Course : Masters in Business Finance
University of Delhi, South Campus, Benito Juarez Road, New Delhi 110021. www.south.du.ac.in
Course : Masters in Business Economics
School of Economics, Devi Ahilya University, Indore. www.dauniv.ac.in
Course : Master of Business Economics
Institute of Chartered Financial Analysts of India, Road No. 3, Banjara Hills, Hyderabad 500034 (A.P.). www.ibsindia.org
Course : CFA programme
Institute of Chartered Accountants of India, Indraprastha Marg, New Delhi – 110002. www.icai.org
Course : CA