ED has collaborated with the School Of Investment Banking to get you a complete insight into the field of core finance and specifically, investment banking. What is it, what courses should one take, what does a typical day of an I-banker look like, salaries and careers in this field, skills needed etc.
So let’s dive straight into Part One of this Educative Series:
What is Investment Banking?
Those who know about investment banking fantasize and worship the life of an investment banker. For them, the profession is nothing less than a dream. Even though it can be a very steep climb, tremendous rewards await those at the top. Investment Banking is a field that generates a lot of interest, but for outsiders, it is mostly shrouded in mystery.
What we know is what we have learned
The conventional image of an I-banker is of a young, ambitious guy in a pin-striped designer suit puffing on a Cuban cigar after closing a deal. We think an investment banker is a person who has put his/her social life on hold, eats Vada Pao in the five minutes break near D-street, works for 16 hours a day and prints money faster than the RBI. We think of it as a super cool and complicated world which is made for us after we have sat in our semester finance class. Well, it isn’t our fault. We don’t delve into its details, neither does anyone bother telling us.
So who is an investment banker?
When asked about I.B., the names that come to our mind are of Jordan Belfort (Wolf of Wall Street), Christian Bale (The Big Short), Gordon Gekko (Wall Street and more popularly Hrithik Roshan (Zindagi Na Milegi Dobara).
Unlike commercial banking (what we’re so accustomed to referring to as banking here in India), Investment Banking is a concerted effort to connect companies that need funds to the capital markets. Investment banks assist companies with raising funds from the equity markets (primary- IPO & secondary), private equity players and other providers of debt capital such as banks and debt funds.
Investment Banks also advise clients on mergers & acquisitions, disinvestments, and restructurings that are focused on enhancing a shareholder’s value. Therefore, investment banks play the role of an advisor and an intermediary. In Microsoft’s recent acquisition of LinkedIn, Microsoft was advised by Morgan Stanley (the global investment bank) and LinkedIn had it’s own advisors too (there were 2 smaller firms involved).
What is the work involved in Investment Banking?
CORE INVESTMENT BANKING & EQUITY RESEARCH jobs involve research, building presentations, company valuation, financial modeling etc. An entry level role in Investment Banking is that of an analyst and here is what they do on a daily basis:
- Preparing pitch books: You can think of these as marketing materials. Investment banks have to pitch to their clients to hire them to work on a deal. In general, the output for all research, info, and analysis is in the form of a slideshow, so as an analyst you need to master Powerpoint
- Doing valuation & number crunching: Analysts run the first set of numbers on company valuation, financial modeling, deal analysis etc. These numbers are then vetted by an associate (next level up from analyst) before being sent to senior members of the team and to clients. Excel skills are key along with an attention to detail. Also, you should be able to go through plenty of annual reports and financials quickly
- In addition, there is plenty of liaison work, coffee getting and of course photocopying (no escape) . Overall investment banking is a great training ground but the learning curve is very steep.
In India, firms like Goldman Sachs, Morgan Stanley, Rothschilds, Credit Suisse are some of the best places for recruitment of investment bankers. But how does one get there? What are the key skills needed to be able to crack investment banking? All these questions will be taken up in our next article. So stay tuned!
In the meantime, do Follow SIB on Quora to get all your queries answered by them directly.
They are also hosting a free info webinar to give a complete know how into this field. Talk to their faculty to have all your questions answered. You can go to their Facebook page for more details.
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Views presented in the article are those of the author and not of ED.