Investment Banking- Details, Jobs, and Scope

Introduction

Everyone is into investment these days, from stocks to cryptocurrency, because, In the current scenario, every human being wants to invest in something or the other. If you look at the startup space in India, it is the investment platform that is making big in the market. From Zerodha to Upstox to Groww, these are all million-dollar companies. So, keeping the trend in mind, today we will talk about a truly up and coming career option that is becoming increasingly popular among India’s ambitious youth. Let us have detailed information on investment banking. 

What is Investment Banking? 

Investment banking is a field of the financial services industry that concentrates on maintaining and growing clients’ financial assets. It is a financial advisory industry that serves the state and central government and other services like corporations, institutions, commercial & non-commercial banks for various transactions. They also provide proper guidelines about stocks and mutual funds. 

The investment banking division typically provides services such as underwriting and M&A advisory. 

investment banking
January 20, 2022
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Table of Contents

Underwriting Services in investment banking 

Businesses need money to operate and grow their business. The bankers help them raise capital in the form of equity or debt securities by marketing the company to the investors. This process is called underwriting. 

M&A Advisory Services 

Merger and Acquisition is the process of helping corporations and institutions find, evaluate, and complete acquisitions of businesses. Bankers advise on both sides of M&A transactions but represent either the buy-side or sell-side of the deal and help negotiate on their client’s behalf. 

Following are the steps involved in the M&A process: 

  1. Acquisition Strategy 

  1. Acquisition Criteria 

  1. Searching for target 

  1. Acquisition Planning 

  1. Valuing and Evaluating 

  1. Negotiation 

  1. Due Diligence 

  1. Purchase and Sales Contract 

  1. Financing 

  1. Implementation 

Banking clients 

Investment bankers advise a wide range of clients, and these clients can be located around the world. 

They include: 

  • Corporations- Every business needs to raise additional capital to grow and expand. Therefore, both private and public companies work with bankers to help them go public (IPO), make acquisitions, sell the business unit, and provide general corporate financial advice. 

  • Governments- As business needs capital to grow, the government also needs capital to fund different sectors for smooth functioning. Investment banks help the government raise money, trade securities and buy or sell crown corporations. 
  • Institutions- Bankers help institutional investors who manage other people’s money in trading securities and providing research. They also help private equity firms to acquire portfolio companies. 

Now you know of investment banking. 

The ones who can demonstrate their ability to add value to an organization are the ones who succeed in this increasingly competitive financial industry. 

Our schooling education does not train us to be investment bankers. You may not have come across any course related to the same. 

So now let us have a look at the courses.  

Top Colleges To Pursue Career in Investment Banking

The most popular investment banker these days is Master of Business Administration. After their MBA, freshers generally start as an analyst. Investment Bankers go through intense training, after which they are introduced to the principles of markets, risk, financial modelling, and accounting. 

Colleges: 

  • Indian Institute of Management, Banglore 

  • Bharathiar University, Coimbatore 
  • Indian School of Business, Hyderabad 
  • MICA Ahmedabad 
  • Indian Institute of Management, Kozhikode 
  • Faculty of Management Studies, Delhi 

  • Indian Institute of Management, Indore 
  • National Institute of Securities Markets, Navi Mumbai 
  • Indian Institute of Management, Ahmedabad 

Investment Banking Certifications/Courses 

Charted Financial Analyst (CFA) Certification: 

The Chartered Financial Analyst Institute gives this certification, and to qualify. One needs to appear for the CFA exam that tests the fundamentals of investment tools, valuing assets, portfolio management, and wealth planning. 

You can also read our blog on the scope of CFA in India.

Certified Public Accountant (CPA) Certification: 

CPA Certification is conferred by the American Institute of Certified Public Accountants to professionals from the accounting and finance industry. To obtain this certificate, you need a minimum of 1-year of supervised experience before taking the exam and achieve a minimum score of 75 to pass the CPA exam. 

Financial Risk Manager (FRM) Certification: 

FRM Certification is issued by the Global Association of Risk Professionals (GARP) and is among the most generally accepted credentials in the field. Before attempting the FRM exam, you must submit two years of full-time relevant financial risk management work experience. 

You can also read our blog on Scope of Certified Financial Planner In India.

Financial Modeling Certification: 

The Financial Modeling Certification is a comprehensive global certification. It is designed to evaluate a candidate’s expert level understanding of Financial Modeling with Excel on investment management, including equity, fixed income, alternative investments, investment banking, financial advisory, financial engineering, and corporate financial decision making. 

To complete any of these courses is no easy task, and it requires hard work, determination, and patience to accomplish it. The reward of becoming an investment banker comes with these hardships. 

Investment banking Jobs/Careers: 

The field of investment banking is very competitive; therefore, before being given a permanent position in the industry, candidates are required to intern in an investment banking firm. There are far more applicants than there are positions, making the experience very valuable. 

Here’s a list of investment banking positions (from junior to senior) 

Analyst: 

The Basic requirement for entry in this position is for a candidate to have 1-2 years of experience in the field. The position requires the candidate to be involved in data collection and creating presentations. Basic analysis of financial data and this experience is important for any candidate to be a successful investment banker. 

Associate/Senior Analyst: 

After 3-4 years of experience working as an analyst, candidates may be promoted to Associate or Senior Analyst roles. Associates are usually responsible for client interaction and pitching ideas to the investors. 

Vice president: 

To become a Vice President in an investment banking firm, a candidate must be an expert in investment banking and have experience working on various projects. 

The Director or Managing Director: 

This position requires a professional with 15-20 years of experience in the field. All the analysts, Associates work under the MD. The Managing Director is responsible for managing all company’s operations and for successful leadership. 

Investment Banking professionals can look for career opportunities in several fields of the market. 

Careers and Job Domains in Investment Banking 

Corporate Finance: 

It is primarily concerned with maximizing shareholder value through long-term and short-term financial planning and the implementation of various strategies. Corporate finance activities range from capital investment decisions to investment banking. 

It is usually considered the foundation of Investment Banking and is the most widespread profile in this domain. In this position, an investment banker is responsible for helping the client raise capital to start new projects or scale up the ongoing operations. 

Merger and Acquisition: 

A Merger is the combination of two firms, whereas, in an Acquisition, a company purchases the other. 

To enter this profile, a candidate must have 4-5 years of hands-on experience in financial services, as the work requires a lot of strategy building. 

Capital Markets: 

Capital Market includes both debt and equity markets, and the investment banks advise the clients on the most appropriate time, valuation, and form of issuance. 

A professional can join as an analyst in this profile as it is usually the starting profile for most investment bankers around the world. For a career in this profile, the candidate needs to be strong in financial, securities, and derivatives analysis. 

Sales and Trading: 

This profile requires a strong understanding of financial instruments, capital markets, options futures, and derivatives and is one of the most desired jobs in investment banks. This is the most desired job because growth in this profile is among the fastest in investment banking profiles. 

The team is responsible for undertaking transactions in equities, currencies, bonds, etc., with other institutional investors and traders on behalf of the client. 

Top Investment Banking Companies in India 

  • Goldman Sachs 
  • Bank of America Merrill Lynch 
  • Morgan Stanley 
  • Citigroup 
  • Deutsche Bank 

  • Credit Suisse 
  • Barclays Capital 
  • UBS 
  • Wells Fargo 
  • HSBC Holdings 

Scope 

An investment banker is someone who helps their client invest their money in a way that will help them yield the highest possible returns. Investment Banking is becoming growingly popular among the enthusiastic youth in India and is a truly up and coming career option. 

There must be some reason why the youths in India are flocking towards this career. First of all, it is an exceedingly rewarding job with rewards in monetary terms and personal and career growth. The youth now is smart enough. They are well aware that knowledge is money, and this career requires a person to be updated about the market, which leaves enormous scope for learning. Another very important reason for this being a popular career choice in finance is that this job gives you pathways to bigger careers like entrepreneurship, wealth management, and venture capital. 

Many multinational companies are setting up shops around the country because India is a growing economy, and this has opened up positions for people who specialize in investment banking. 

People from any stream can get into the investment banking field, so, Whether you are from a science background, a commerce background, or any other background, you are open to the possibility of becoming an investment banker. As far as higher education is concerned, an aspiring candidate must have an MBA degree (Master in Business Administration). 

Apart from the education profile, a candidate must have internship experience in a well-known company so that getting hired becomes higher. 

With your degree, backed up by internship experience, you can expect to earn anywhere between 6-8 lakhs per annum which will eventually grow as you work more and gain more experience. 

If we talk about the scope of investment banking in India, it is truly a great career option because the rate of FDI is increasing in India. And this is mainly because a huge number of Indian companies are raising capital from global and domestic investors. 

Investment Bankers Pros and Cons 

Pros: 

  1. Investment Banking is one of the highest-paid sectors in India. 

  1. Investment Banking is a challenging field. Even experts face challenges now and then. 

  1. It allows a candidate to sharpen their knowledge. 

  1. This field provides first-hand knowledge of the market. 

  1. The investment banking field promises rapid growth for promising candidates. 

Cons: 

  • Investment Banking is not for everyone because it is a demanding and stressful job. 

  • There is no work-life balance in this field. 
  • It is a high-risk job because it is heavily dependent on the market. 
  • Investment Bankers are prone to health diseases because of work-related stress. 
  • Automation and AI are causing a reduction in job availability in the sector. 

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Final Thoughts

As you can see, there is a great scope and opportunity in investment banking because it is a growing sector with many options to choose from. If you want to make it big in this sector, you need to gain a lot of experience because this industry rewards hard-working and patience. 

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