THE INVESTMENT BANKING CAREER PATH : THE COMPLETE GUIDE 2023

INVESTMENT BANKING

What Is Investment Banking?

“To Certain Activities of a Financial Services Company or A Corporate Division That Consist in Advisory-Based Financial Transactions on Behalf of Individuals, Corporations, And Governments”.

 Investment Banking Activities Include Advising Clients On-

• Mergers And Acquisitions,
• Underwriting New Debt
• Equity Securities for Companies,
•  Assisting With Public Offerings,
• Providing Market-Making Services in Securities,
• Helping Clients Raise Financial Capital by Acting as Intermediaries Between Security Issuers & Investors.

Investment Banking Also Involves Creating Customized Financial Strategies, Providing Financial Analysis and Advice, And Developing Capital Raising Strategies.

WHY A CAREER IN INVESTMENT BANKING?

“Overall, investment banking is attractive to people who want to make a lot of money, enjoy the intensity and challenge of a fast-paced industry, and have an exit strategy that will lead them to other lucrative career opportunities”.

  INVESTMENT BANKING DIVIDED INTO THREE CORE-PRODUCTS

1.INVESTMENT BANKING (Mergers and Acquisitions, Advisory Services, And Securities Underwriting)

2. ASSEST MANAGEMENT (Sponsored Investment Funds)

3. TRADING AND PRINCIPAL MANAGEMENT (Broker-Dealer Activities, Including Proprietary Trading ("Dealer" Transactions) And Brokerage Trading ("Broker" Transactions)

1. INVESTMENT BANKING

Core Investment Banking Activities Include:

• -Mergers And Acquisitions
• -Capital Raising
• -Debt And Equity Financing
• -Advisory Services
• -Risk Management
• -Market Making
• -Research And Analysis
• -Financial Restructuring
• -Project Finance
• -Securitization
• -Asset Management
• -Derivatives Trading
• -Sales And Trading
• -Asset Securitization
• -Syndicated Financing
• -Structured Finance
• -Private Equity
• -Index Arbitrage

2. ASSEST MANAGEMENT

Asset Management Is the Practice of Increasing Total Wealth Over Time by Acquiring, Maintaining, And Trading Investments That Have the Potential to Grow in Value.

WHAT DOES AN ASSEST MANAGER DO?

Asset Managers Manage and Monitor a Company’s Assets. This Could Include Property, Money, Stocks, Shares and Bonds, Commodities, Equities and Other Financial Products. As An Asset Manager, You’d Aim to Maximise Your Employer’s Return on Investment.

The Job Role of An Asset Manager Involves the Following Duties: 

• Maximizing Profitability
• Running And Analyzing Inventories of All Assets
• Liaising With Suppliers to Obtain the Best Price for Assets
• Investing Money for Upcoming Projects
• Working With Asset Management Systems and Tracking Technologies
• Ensuring Financial Records Are Up-To-Date and Accurate
• Monitoring Materials, Workforce, Tools, Equipment and Supplies
• Reporting On Finance and Forecasting Budgets
• Working In an Office and Making Occasional Site Visits.

Types Of Asset Manager

•  Registered Investment Advisor
• Investment Broker
• Financial Divisor
• Robo-Advisor

3.TRADING AND PRINCIPAL MANAGEMENT

It Is Customer Transactions and Takes Proprietary Positions Through Market Making In, And Trading Of, Fixed Income and Equity Products, Currencies, Commodities, And Swaps and Other Derivatives.

THREE GROUPS DIVIDED:

• Fixed Income
• Currency And Commodities
• Equities And Principal

Fixed Income, Currency and Commodities (FICC)

FICC’s Principal Products Are:

• Commodities And Commodity Derivatives;
• Credit Products,
• Including Investment-Grade Corporate Securities,
• High-Yield Securities,
• Bank Loans,
• Municipal Securities,
• Credit Derivatives and Emerging Market Debt;
• Currencies And Currency Derivatives;
• Interest Rate Products,
• Including Interest Rate Derivatives and Global Government Securities;
• Money Market Instruments; And Mortgage-Backed Securities and Loans.

EQUITIES

As A Specialist For, And Trades Equities and Equity-Related Products, Structures and Enters into Equity Derivative Transactions, And Engages in Proprietary Trading.

PRINCIPAL INVESTMENTS

Principal Investments Primarily Represents Net Revenues from Our Merchant Banking Investments. We Make Principal Investments Directly and Through Funds That We Raise and Manage.

JOB PROFILE’S IN CORE – INVESTMENT BANKING

• Capital Raising, Book Building, Prospectus Drafting
• Private Placement of Capital
• Mergers, Acquisitions & Divestitures
• Corporate Restructuring
• Debt & Equity Advisory Services
• Bond Issuance & Pricing on Bond Markets
• Hedge Fund, Mutual Fund, & Pension Fund Advisory Service
•  Underwriting

WHAT INVESTMENT CAREER REQUIRED?

• Competitive, High Achievers Who Are Willing to Work Long, Grinding Hours.
• Extremely Attentive to Detail.
• Solid In Terms of Reading/Writing and Math, Though Not Necessarily Amazing in Either Area, As Little “Real Math” Is Required.
• Interested In Deals Rather Than Simply Following the Markets or Investing in Public Companies or Other Assets.
• Interested In a Specific Exit Opportunity That Normally Has Investment Banking as A Prerequisite, Such as Private Equity or Corporate Development.

ORGANISATIONAL STRUCTURE OF INVESTMENT BANKING

Investment Banking Split into Three –

 (A)FRONT OFFICE,

(B) MIDDLE OFFICE, AND

(C) BACK-OFFICE ACTIVITIES

FRONT OFFICE – “Revenue Generating Role”

Two Main Areas in Front Office

A) Investment Banking

(B)Investment Market/Markets, Which Includes: Sales; Trading; Research; Structuring

1.INVESTMENT BANKING –

     Investment Bankers Provide:

• Financial Advice to Companies,
• Governments To Help Them Make Decisions Related to Raising Capital, Investing in Securities, And Managing Their Assets,
• Help Their Clients Raise Money by Issuing Debt or Equity in The Capital Markets.

1.Provision of Financial Advice

 Investment Banking Advice Relates To “Corporate Actions Rather Than Product or Organizational Matters”

• Product Improvement,
• Market Analysis or Management of Organization.

2.Mergers and Acquisitions

The Majority of Financial Advice of Investment Bank Relates to M&A. The Client Company Seeks to Expand by Acquiring Another Business Because Of:

• Increasing The Range of Products
• Increasing The Business' Geographical Footprint
• Complementing Existing Products Integrating Vertically

2. Markets, Which Includes: Sales; Trading; Research; Structuring (Investment Market)

Markets Are Then Split into Further Divisions

• Sales And Trading
• Some Research & Structuring

1.Sales and Trading – “Trading of Buying & Selling “

The Investment Bank Also Provides-

• Guidance To Corporations Issuing New Securities, In the Form of Advice on The Issue and Placement of Stock.
• Investment Banks, Provide Services Such as Underwriting and Acting as An Intermediary on Mergers and Acquisitions.

2.Research-

Investment Bank Evaluates Companies and Publishes Reports on Their Potential, Often Including "Buy" Or "Sell" Ratings.

• This Sell-Side Analysis Covers a Variety of Industries.
• Banks Also Have Buy-Side Research Teams That Work in Their Sponsored Funds or Proprietary Trading Departments. 

 MIDDLE OFFICE

This Area of The Bank Includes Treasury Management, Internal Controls, And Internal Corporate Strategy.

Corporate Treasury Is Responsible for An Investment Bank's Funding, Capital Structure Management, And Liquidity Risk Monitoring.

BACK OFFICE

(I)Operations

This Involves Data-Checking Trades That Have Been Conducted, Ensuring That They Are Not Wrong, And Transacting the Required Transfers. Many Banks Have Outsourced Operations. It Is, However, A Critical Part of The Bank.

(II)Technology

Every Major Investment Bank Has a Dedicated Technology Team That Is Responsible for Creating and Providing Technical Support for The Bank's In-House Software. In The Last Few Years, Technology Has Advanced Significantly, Allowing Sales.

ELIGIBILITY OF INVESTMENT BANKER

WHAT ARE THE STEPS TO BECOME AN INVESTMENT BANKER?

One does not need to follow a specific course or stream in order to become an investment banker. anyone who has a good understanding of financial assets and Investment. Completing a professional program in a related field makes a student an excellent candidate for an INVESTMENT BANKER job, given the competitive nature of the India.

1.Earn a Bachelor's Degree in Finance or a related field

You Can Choose to Pursue Your Bachelor's Degree in Accounting, Corporate Finance, Economics, Business Administration, Mathematics or Data Analytics. No Matter the Field of Study You Choose, You Should Have Strong Mathematical Skills with A Firm Understanding Of Economics And How it’s used in corporate finance.

2.Consider a Post-graduate Degree or MBA

Many Firms Prefer Post-Graduate Degree Holders for A Position of An Analyst or An Associate. Look For a College That Offers Internships and Full-Time Job Opportunities in Investment Banks.

 3.Obtain Certification

You Can Consider Doing the Chartered Accountancy (Ca) Course Governed by The ICAI or The Institute of Charter Accountants of India.

4. Take Part in Internships or On-The-Job Training

You Can Also Get On-The-Job Training Once You Join a Firm at An Entry-Level Position. You Need to Complete Your Training Before Starting Your Regular Job. The Training Will Also Help You Develop Your Presentation and Communication Skills                  

TYPES OF JOB ROLES IN INVESTMENT BANKING

The job roles of an investment banker typically include providing financial advice to clients, conducting market research, analyzing financial data, and managing investments. Experienced investment bankers are expected to have a thorough understanding of all aspects of the banking and finance industry, including accounting, investments, financial products, and regulations. They should also be highly analytical, possess excellent problem-solving skills, and have a good understanding of risk management. Additionally, good communication skills are essential for success in this field since investment bankers.

•  ANALYST/JUNIOR ANAYLST:  A junior analyst is an entry-level position that typically requires a candidate to have 1-2 years of experience in the field. Candidates must have a bachelor's degree or higher in finance, economics, accounting, or a related field

• ASSOCIATE/SENIOR ANALYST: After 3-4 years of experience, candidates may be promoted to the roles of associate or senior analyst. Associates usually are responsible for pitching ideas which help in finding investors in getting clients.

• LEADERSHIP ROLES: with further experience in the field investment banker can take up leading roles such as vice president managing director etc, in investment banking firms. this are well -paid position by required candidates to have a thorough experience and knowledge in the field.

 TOP RECRUITING COMPANIES FOR INVESTMENT BANKER                                                                     

• KPMG
• WNS
• WIPRO
• UBS
• RESURGENT INDIA
• DELOITTE
• WNS
• WIPRO
• RESURGENT INDIA
• CITI BANK
• MOODYS ANALYTICS
• FITCH RATINGS
• WIPRO
• RESURGENT INDIA
• MOODYS ANALYTICS
• DEUTSCHE BANK
• GENPACT
• MORGAN STANLEY
• RESURGENT INDIA
• MOODYS ANALYTICS
• GENPACT
• HSBC
• EVALUESERVE
• PWC
• MOODYS ANALYTICS
• GENPACT
• EVALUESERVE
• WELLS FARGO
• THOMSON REUTERS
• AURUM
• GENPACT
• EVALUESERVE
• THOMSON REUTERS
• ACCENTURE
• HDFC BANK
•  SP GLOBAL                                         
• KPMG
• MORNINGSTAR
• WIPRO
• UBS
• RESURGENT INDIA

 KEY SKILLS OF INVESTMENT BANKING

 1. FINANCIAL SKILLS

Here Are Some of The Top Financial Skills That You Might Use on The Job as An Investment Banker:

• Financial And Statistical Analysis and Modelling
• Data Interpretation
• Risk And Credit Management
• Knowledge Of Legislative and Regulatory Policies and Procedures for The Financial Sector
• Knowledge Of Investment Products Like Stocks, Futures, IPO, Commodity Markets, Foreign Exchange, Derivatives

ANALYTICAL SKILLS

Investment Bankers Analyze Large Sets of Data, Solve Problems and Make Crucial Financial Decisions. Their Job Requires Collecting, Evaluating and Analyzing Data to Make Informed Decisions.

INTERPERSONAL SKILLS

A positive attitude and the ability to meet the demands of challenging clients in high-pressure environments are vital characteristics that help investment bankers be successful in their roles.

PROJECT AND TIME MANAGEMENT

Investment bankers are responsible for managing multiple high-profile clients at one time. learning specific time management skills or adopting project management tools can help you manage multiple projects effectively.

DISCIPLINE AND WORK DEDICATED

Investment Bankers Often Work Long Hours, Especially Around Significant Milestones Like Mergers and Acquisitions.

SOFT SKILLS (COMMUNICATION, LEADERSHIP, TEAM WORK)

Investment Banking Is Primarily a communication, Team Role and Requires leadership qualities Candidates to Work Collaboratively with Data Analysts and Other Financial Experts.

 INVESTMENT BANKING CAREER PROS AND CONS

 Benefits / Advantages:

• Employees of all levels are offered generous salaries and bonuses.
• Exceptional performance can lead to swift career advancement.
• Analysts have access to excellent career opportunities.
• The industry’s reliance on relationship-based sales reduces the risk of disruption by technology.
• One can gain invaluable exposure to various firms, industries and leadership teams.
• The hard and soft skills acquired are applicable to a variety of industries and companies
• The ability to collaborate with a variety of people, both internally and externally.
• The chance to work with cutting-edge financial technology.
•  The opportunity to develop your skills in a fast-paced environment

Drawbacks / Disadvantages:

• Unsatisfactory work/life balance and excessive work hours, even when you reach the top.
• Monotonous and often tedious tasks, with a lot of waiting for others.
• Difficult to progress to the highest levels.
• Limited opportunities to exit from the middle levels.
• Low social impact unless you become very wealthy.
• Difficult to enter the industry if you have a late start, change careers, or attend a non-target school.

WE HAVE SOME QUERIES FOR YOU??

Q 1. Do you think investment banking is the right fit for you? Consider if you are willing to endure significant challenges to reach financial success.

Yes, I believe I have the necessary qualifications and skills to pursue a career in investment banking. I have a strong educational background in finance and economics, as well as a passion for the financial markets and a commitment to staying up to date on the latest industry trends. I also possess excellent communication and problem-solving skills, as well as an understanding of how to analyse financial data and make informed decisions. All these qualities make me an ideal candidate for a career in investment banking.

Q2. How do you select companies to invest in and what is your process for evaluating potential investments?

My process for evaluating potential investments involves researching the company, its financials, and its competitive landscape to get an understanding of the company’s competitive advantages and risks. I also look at the company’s management team and their track record in the industry. I then evaluate the current valuation of the company, its potential for growth, and its potential for generating returns. Finally, I assess the risk associated with the investment and the overall potential for return in comparison to other opportunities.

Q3. What are the common career paths of an investment banker?

The most common career paths for an investment banker include working in corporate finance, mergers and acquisitions, private equity, capital markets, wealth management, or venture capital. Other career paths may include asset management, corporate development, and financial analysis.

Q4. What are the risks associated with investment banking?

The risks associated with investment banking include credit risk, market risk, operational risk, liquidity risk, legal risk, reputational risk and strategic risk. Credit risk is the risk of losses due to the inability of counterparty to fulfil its obligations. Market risk is the risk of losing money due to changes in the market. Operational risk is the risk of losses due to internal operations. Liquidity risk is the risk of losses due to lack of liquidity in the market. Legal risk is the risk of losses due to legal issues. Reputational risk is the risk of losses due to tarnishing of reputation. Strategic risk is the risk of losses due to wrong strategies.