Please let me know more about an investment banking

Investment banking is considered one of the premier fields in the financial industry & the career opportunities in this field is on the rise.

Essentially, there are two main functions of it:

Raising Capital- A company might want to raise capital for whatever reasons (expansion probably).

First, it approaches an Investment Bank (Goldman Sachs, JP Morgan, etc..) and says that it needs x amount of money.

The bank will scramble to determine the best possible route to raise the x amount. They have to value the company and convince investors to invest.

It might decide to issue fixed-income instruments. Or issue more shares. Or just call up private investors. The role of selling off these instruments and raising money goes to the Sales department.

Advising and Conducting Company Deals These deals might be Mergers & Acquisitions (M&A), Leveraged Buyouts (LBOs), etc…

First, a company will approach a bank and say that it is interested in buying a certain company, or it might want to say that it is interested in selling itself.

The bank scrambles to find suitable buyers/sellers while collecting reams of data on the company to be bought/sold. They have to understand the companies involved and often sift through tons of financial information and company data. The bankers find the necessary data to help value a company and condense the information into compressible presentations/pitchbooks- the information helps convince potential buyers to invest (or not to invest).

This step often takes months and in the end, the deal might not even go through and all that time would have been for nothing.

If the deal goes through, often after months of presenting, convincing, and updating, the bank takes a portion of the deal. Obviously, the bigger the deal, the better.

An Investment Bank also has various departments not listed above, such as Research, Trading, Compliance, and Corporate Finance.

To make a career in Investment banking you should have a bachelor's degree which belongs to the finance / commerce background. Knowledge of Economics is even better, not a pre-requisite though, even a certification in Investment banking will be added advantage for you.

Thank you!

Hii Siddhant

Investment banking is the division of a bank or financial institution that serves governments, corporations, and institutions by providing underwriting (capital raising) and mergers and acquisitions (M&A) advisory services. Investment banks act as intermediaries between investors (who have money to invest) and corporations (who require capital to grow and run their businesses). This guide will cover what investment banking is and what investment bankers actually do.

What Do Investment Banks Do?

There can sometimes be confusion between an investment bank and the investment banking division (IBD) of a bank. Full-service investment banks offer a wide range of services that include underwriting, M&A, sales and trading, equity research, asset management, commercial banking, and retail banking. The investment banking division of a bank provides only the underwriting and M&A advisory services.

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For more information

https://www.howtobecome.com/how-to-become-an-investment-banker

Hope I answered your question.

Good luck!

Hello Aspirant

Investment Bankers helps institutions in Fund raising (either IPO or Secondaries) and in M&A.

This could be of two types of Investment Banks you can target - Bulge Bracket/MNCs and Indian Banks.

Bulge Bracket consists of world’s largest global investments Banks. It includes the likes of BAML, Barclays, CitiGroup, CS, Goldman, JP Morgan, Morgan Stanley, UBS. I’ve also included other MNC Banks (Moelis, Standard Chartered, etc.) in this category because they do the same work and give the same pay.

They typically have a 8–15 member team and are very selective in their hiring policy. There are very few vacancies in a year and it’s very difficult to get into one. They hire primarily through 2 career paths

1. MBA —-> Internship —-> PPO - Almost all the bulge bracket hire from IIM ABC. There are few that go to Lucknow, FMS and XLRI. So if you want to get into a Bulge Bracket, then try to get into ABC. In a good year they take 35-40 interns across all three campuses (Top 3% of the typical batch). But the PPO ratio is very low with upto 10–15 people getting a full time offer. What makes these roles lucrative is that they pay a base of 35-40 Lacs and annual bonus upto 100%.

2. CA → 6 months Internship/1 year Contract → Full time offer - Few firms take CAs for their Analyst program for a 6 months internship or a contract role. This is very rare tough. BAML, Credit Suisse, Goldman, JP Morgan, Moelis hire CAs for their internship and have also give full time offer. But only 5–10 CAs get an opportunity like this with 2–4 getting full time offers.

I’ve also seen people from good Undergrad colleges like SRCC, Stephens and Xaviers’ getting into Bulge bracket but that is quite rare.

Indian Bank consists of the likes of Kotak, Avendus, JM Financial, Ambit, Arpwood, Yes Bank, Edelweiss, ICICI, SBI Caps, IIFL, O3, Axis Capital etc.

This consists of large Indian Banks that are involved in M&A and IPO issues. Bulge Braket because of their limited bandwidth handle only large IPO and M&A transactions. As a Bulge bracket analyst you’ll typically be handling 2–3 deals in a year. On the contrary, Indian Banks typically have a larger team size and handle large array of deals of various sizes. Their team size could range from 10–40 members. So they have more vacancies over the year. They hire primarily through various career paths

1. MBA —-> Internship —-> PPO (or) MBA —-> Final Placements - Almost all the Indian Banks hire from Top 10 BSchools. In a good year they take 80–100 interns across all three campuses. They pay a base of 15–25 Lacs and annual bonus of upto 100%. Here they are typically hired directly into the Associate role.

2. CA → Analyst role - A lot of Indian Banks like Kotak, Ambit, Avendus, Yes Bank etc. directly recruit CAs in the Analysts role.

3. B.Com from Top College —-> Analyst role

4. IIT —→ Internship —-> PPO

5. CA —-> Equity Research/Valuation/Due Diligence → Associate role - I know people working in Equity research or DD at a Big 4 who have also shifted to Investment Banks.

I hope that this was helpful.

Best of luck!