Investment Banking Overview

Welcome Message

• Introduction to understanding investment banking in detail.
• Topics include how investment banking works, key profiles, required skills, and differences with commercial banking.

Distinguishing Investment Banks from Commercial Banks

• Commercial Banks:
  • Regulated entities by RBI.
  • Functions: Accept deposits, give loans, and offer services like RTGS, NEFT, bank guarantees.
  • Profit from interest spread.
• Investment Banks:
  • Core division: Investment banking division.
  • Functions: Mergers & acquisitions, demergers, IPOs.
  • Key roles: Front office, middle office, back office.
  • Classifications and types of investment banking.

Functions and Roles in Investment Banking

1. Investment Banking Division
   • Mergers & Acquisitions: Example of Infosys acquiring a data analytics company.
   • Process includes target scouting, primary due diligence, valuation, financial due diligence, legal due diligence, deal negotiation, regulatory approvals, and tax compliance.
2. Equity Capital Markets
   • Functions: IPO, FPO, private placement.
   • Tasks: Book running, lead management, underwriting.
3. Research
   • Conducts research for both clients and internal departments.
   • Provides industry outlooks and facilitates informed trading.
4. Wealth Management
   • Services: Family office management, estate planning, retirement planning, private trust management.
5. Debt Syndication
   • Facilitation of large corporate loans, often involving multiple banks.
   • Process includes loan negotiations and managing consortiums.
6. Trading and Brokerage
   • Trading: Managing idle funds for profit.
   • Brokerage: Client transactions for a fee.
   • Proprietary trading: Trading for the bank's own profit.

Investment Banking Classifications

1. Bulge Bracket Banks
   • Examples: JP Morgan, Goldman Sachs.
   • Pros: Involvement in large deals, working with top professionals.
   • Cons: Highly systematic work processes.
   • Salary: 11-19 lakhs for freshers.
2. Elite Investment Banking Firms
   • Examples: Rothschild, Evercore.
   • Specialize in specific sectors, offer personalized services.
   • Salary: 8-20 lakhs for freshers.
3. Regional IB Firms
   • Examples: Northern Arc, Evindus Capital.
   • Pros: Broad exposure to entire deal cycle.
   • Salary: 4-13 lakhs.
4. Big Four Firms
   • Examples: EY, KPMG.
   • Offer investment banking services leveraging audit relationships.
   • Salary: 8-11 lakhs.

Skills and Path to Become an Investment Banker

• Path includes understanding and mastering various roles and functions within investment banking.
• Importance of subscribing and following up with learning materials and networking for guidance.

Conclusion

• Encouragement to engage with the content for deeper understanding of investment banking.
• Invitation to connect for further assistance and learning opportunities.