Investment banking in India

Updated on Sept. 5, 2022, 12:03 p.m.

It is believed that an Investment Bankers or the Investment Banking Division of any banks or an Organisations play a vital role in the growth and development of a business enterprises and other corporate entity.

In India if we take into account the functions of the Private Sector Banks and the public sector banks, and the cooperative banks, most of them are governed by the Reserve Bank of India acting as the greatest regulator for the banking industry in India.

There are around 40 public sector banks and more than 60 banks in the private sector of our nation. Let us analyse the concept of Investment Banking and its importance in the current world scenario.

What is Investment Banking?

In the broader context the Investment banks act as intermediaries between Investors (People having money to invest) and the corporations (Agencies requiring money to run their business).

Let me break down the concept of Investment Banking in simple words, they are investment professionals working for a bank or any financial institution helping the cause of Government, Companies’ Corporations and others by offering Underwriting services, and this could be in the form of the Capital Raising, Mergers and Acquisitions, Market Creation, Trading of Derivatives, Fixed Income Instruments, Currencies and its associated Commodities, Equity Services and the Advisory Services.

Services and functions offered by Investment Bankers

Investment banks provide long range of services such as Asset Management, Services, Underwriting Services, M&A, Sales and trading, Funding for startups and Equity research.

  • Asset Management: This refers to the process of creating, developing, operating, selling and maintaining the assets in a systematic manner. This term known as Asset Management is ideal for various firms and people maintaining the Assets on behalf of other establishments. There are 2 kinds of Assets namely the Current and Fixed Assets. Fixed Assets are the assets ideal for the long-term use, whereas the Current Assets are those that can be transformed into cash within a short duration.
    Some of the advantages of the Asset Management are given below as follows:
    • This is good in identifying and managing the risk factors.
    • Assists in creation of Strategic Asset management plans.
    • Helps the firms to be responsible for all the assets of the companies.
    • Ideal for ensuring that various financial transactions are recorded in statements in a logical manner.
    • The lost, damaged and the stolen assets are eliminated in record of the companies.
  • Underwriting Services:  We are good in doing underwriting services, where in your money lender verifies your Assets, Income, Debt and Property details to issue the final approvals for your loans. The underwriter is a financial expert, playing a major role in looking at your finances and estimates the risk lender needs to take if they want to give you loans. They also play a major role in raising money between the investors and companies to raise money or go public using the IPO process.
  • Mergers and Acquisitions: It is the major term describing the grouping of the Assets and Companies using various financial transactions like Mergers, Acquisitions, Tenders, Consolidations, Purchase of Assets and Management activities as well. Acquisition refers to taking over of one establishment by another.
  • Sales and Trading: This is a major part of Investment Banking, that helpful in creating the markets for various clients and securities.  They consist of various sales force and back-end teams calling up the potential investors with new ideas and there are various traders executing various orders and advise clients on investing in certain Stocks, Mutual Funds and Securities as well.
  • Equity Research: This is study of business and environment created in order to purchase and selling decisions about various shares in the market.  The major role is to offer detailed research report about the activities of the stock market industry. They deal with Purchasing, Selling, and possessing a certain investment pattern.

Skills required to become a successful Investment Banker

  • Financial Modelling: We are good in undertaking wide range of various financial modelling activities like creating of 3 Statement Models, Discounted Cash Flow Models, Leverage Buyout (LBO) Models, Budget Models, Forecasting Models and the Option Pricing Models.
  • Business Valuation: There are various means of business validation methods used by various industrial experts such as Precedent Transactions, Comparable Company Analysis, Discounted Cash Flow DCF Analysis etc.
  • Effective Pitchbooks and Presentations: A unique sales book used by the Investment Banks to sell various products and services to various clients. The determination is to obtain an overview of the transformation, financial strength and services offered to the people.
  • Creating the Transaction Documents: We will be creating various documents like the Confidential Information Memorandum (CIM), Investment Teasers, Confidentiality Agreement, Term Sheets, Creating the Data Rooms, Key business products, Client Relation Report, Services of Companies, Vision of Company, Cash Flow Techniques, Business Segments and others.
  • Business Development: All the banks have their Business Development Teams and Recovery Teams to meet the clients and give them new ideas and support their work in a logical manner. Furthermore, we also offer Value Added Services like Gross Value Added (GVA), Economic Value Added and others.
  • Relationship Management: We work in a systematic manner with various clients in order to strike the deal and also make sure that they are happy with the relevant services offered.
  • Doing the Negotiations: We undertake dialogue between 2 or more people with the motto of reaching compromise over various issues and concerns in a systematic manner. Excellent negotiations are vital to create a wining situations and outcome will be very good. Investment firms make sure that they get good deals.

List of popular Investments Banking institutions in India

  • ABN Amro.
  • Allen and Company.
  • Bank of America.
  • Barclays Capitals.
  • BNP Paribas Bank.
  • Canara Bank.
  • Credit Suisse Bank.
  • Credit Agricole CIB.
  • Daewoo Securities.
  • Europa Partners.
  • Evercore Partners.
  • Guggenheim Partners.
  • HSBC Holding PLC.
  • Imperial Capital Limited.
  • J P Morgan Private Limited.
  • Lloyds Bank PLC.
  • Mizuho Financial Groups.
  • Punjab National Bank.
  • Royal Bank of Scotland.
  • Scotia Bank.
  • United Bank of India.
  • Vijaya Bank.
  • Wells Fargo and Company.
  • Yes Bank.

The amount of time to become an Investment Banker differs according to the situation, roles and responsibilities and the institution you have associated with. The function comes with lot of challenges and is very dynamic in nature and banks are using Investment Banking in order to boost their chances of wooing the customer across the globe.

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