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Category: Investment Banking

What is Difference Between Investment Banking and Corporate Finance?

Posted on by Imarticus Learning

Both investment banking and corporate finance deal with financial transactions and banking with some key differences. While investment banking deals with growing a company through raising its capital base the corporate finance division deals with managing the company and its daily operations and its goals for business both long and short term in nature. IB operates in raising capital for the company in the form of securities in the equity and debt markets. The IB also helps advice clients in acquisitions, mergers, placing investments, and executing financial research and analyses.

Another glaring difference between the two pertains to the experience and academic qualifications required to be in investment banking being higher, more demanding and expensive when compared to those required for the corporate finance banker.

However, there is a lot of overlap in the two areas in terms of educational qualifications and job-skills required for both areas. Thus one can expect the IB requisite skills to also apply for the corporate finance FAs.

Pay Packages:
In the US the financial analyst in IB had an average salary of 84,300 USD as reported in 2017 by the BLS. The CFO salary had an average monthly pay package of 104,700 USD.

According to Wall Street Oasis, the starting career step of a junior IB analyst was in the range of 70,000 to 150,000 USD annually with negotiated bonuses and performance incentives added in. The BLS predicts 11 percent growth in FA positions between the decade starting 2016. This is better than the 8% anticipated growth for the corporate FAs.
Payscale reports the investment banker salary is an average salary of 508, 855 Rs for a fresher.

The salary components can vary between 177,560 to 1,545, 630 Rs while the bonuses can vary with contract negotiation from 2,517 to 524, 023 Rs depending on your skills and performance. In the US this is between 75-90k pa and an average total of 140k pa for a fresher.

Thus the total payouts can be much higher depending on performance and bonuses. Doing the investment banking course helps you earn a global measurable certification which validates your skills and knowledge and is acceptable as real-life experience of the financial and investment banking experience requirements preferred by most employees.

Difference Between Investment Banking and Corporate Finance

The major difference in the two segments pertains to salary or payouts and work-loads.
Burnout occurs with long working hours and much work. More than one-half of the banking job aspirants, especially in IB, quit in the first three years!

The IB teams are generally small and lean with one analyst, two associates and a VP reporting to the Lead Director. And the working is inverted bottom up, meaning they bear all the workload. An 80 to 100 hour week with working Sundays is not uncommon and social life grinds to a complete halt.

In contrast, FAs in corporate finance jobs benefit from the corporate culture and the working hours are definitely not as punishing. The FAs in IB though receive a flat percentage of their business meaning their take-home pays are way higher and performance-based.

There is a lot of prestige in IB jobs, and in the same breath, corporate finance jobs are not so easy to get and are still a good career choice. Aspirants for the allure and prestige of the IB job need to work harder, with more work-loads and long hours when compared to the FAs of Corporate Finance. That’s why they get paid higher and ascend the ladder quicker.

The ladder to climb in IB starts with the junior position, to an Associate role in 3 years leading to the VP role and then the Lead/ Managing Director etc. Corporate finance offers many opportunities as advisors, accountants, account managers, treasurers, analysts, business analysts etc.

Conclusions:
The prestigious investment banking job allows you to either start as a Junior Analyst with an under graduation or as an Associate with experience by doing your Banking and financial course with a reputed institute like Imarticus Learning. The requirements are no different for the corporate finance sector.

However, specialization and certification in the area or vertical you are interested in help. The prestigious Investment Banking jobs are generally filled with ivy-league business school graduates especially in reputed companies like Morgan and Stanley or Goldman Sachs etc.

Doing the Investment Banking Course at Imarticus is the short cut to a great Investment Banking career. Why wait then?

Career and Scope of Investment Banking in India

Posted on by Imarticus Learning

Investment banking is a truly up and coming career option that is becoming growingly popular among the ambitious youth in India. An investment banker, simply put, is someone who helps their client (often a bank or a financial firm) invest their money in a way that will help them yield the highest possible returns. These jobs come with a lot of responsibility like dealing with debt, stocks and bonds, mergers and acquisitions, securities and derivatives.

Being a successful and good investment banker is bound to be a challenge. Cracking this code requires you to be great with numbers. In addition, you need to also possess substantially good verbal and written communication skills. Honing your presentation skills will also benefit you enormously to land that dream job. Investment bankers are required to do extensive research of the market before making any suggestion about potential investments and would thus need to have their research and analysis skills on point. Endurance is also a key in this highly-stressful job with long and, often, odd hours.

That being said, there are also a number of reasons the youth in India is flocking towards this career. It is an exceedingly rewarding job with rewards in monetary terms as well as personal and career growth. It is a fast-paced job that requires you to be on your toes a lot and be constantly updated about the market – which changes a lot. This leaves an enormous scope for learning which is a truly valuable thing in anyone’s career. 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.

A huge reason for the growth of this career over the past few years in globalisation which has led to a booming financial sector. India is a rapidly growing economy with numerous multi-national companies setting up shop around the country. This has opened up several available positions for students who specialise in investment banking.

The good news for anyone considering this career is that you don’t require any specific stream. You can get into the field irrespective of if you have a background in science, arts or commerce as far as your subjects are related – like maths and economics. As for higher education, any aspiring investment banker in India is required to have an MBA degree (Masters in Business Administration). Some institutes also provide diplomas and certificates while some even conduct workshops for investment banking. Top institutions in India for the field of investment banking are ones like Institute of Chartered Financial Analysts of India University and Symbiosis School of Banking Management.
Along with your education, to get into this competitive field, internships are going to be your best friend. The more well-known the company you intern at, the better your CV looks to the recruiter and the better your chances of getting hired. But even getting a good internship is hard so you can always start out small at a smaller bank or a boutique firms. Experience is a key to rising higher as an investment banker and internships are meant for the exact purpose. Top Investment Banks like the Citi Group, JP Morgan and Deutsche Bank are great places to aim at.

With your degree in hand along with your internship experiences, you can expect to earn anywhere between 6-7 lakhs per annum which will only grow leaps as you work more and gain more experience. If you think that you can efficiently fill the requirements and have a passion for finance, Investment Banking is the ideal choice for you.

Also Read: Is Investment Banking High Paying Job

Impact of Technology on Investment Banking

Posted on by Imarticus Learning

The Financial Services industry is without a doubt seeing the effect of innovation driven change either straightforwardly to their plans of action (for both customer and business customers) or even as an optional or tertiary effect, given it’s at the center of all different ventures. While these organizations have made a tolerable showing with regards to by and large of receiving more current and propelled advancements, they clearly need to get a move on of appropriation or hazard losing piece of the overall industry to the freshest participants – or more terrible, getting to be noticeably out of date.
The most recent influx of development and technology is about versatility. The web based keeping money and financier encounter has now moved onto your telephone which upgrades accommodation on many levels.
Banking and Investment applications would now be able to connect into your telephone’s GPS to give you area based data, for example, closest ABMs and branches.
Versatile and remote advances are a greater amount of a development in my psyche as they haven’t radically changed the market as much as past developments.
Remote installment innovation over RFID (Visa Pay Wave, MasterCard Pay Pass) is up to twice as quick as utilizing money or check cards. Charges won’t be dropping but rather buyers are getting back another extremely significant ware, time.
The normal retail Investment Banker or Financial Analyst won’t think excessively about how quick their exchanges are executed however dealers, institutional speculators and mutual funds do.
Executing exchanges a couple of milliseconds quicker on a trade can have a major effect when you are doing thousands or even a huge number of exchanges a day.
Getting the most ideal cost for your customers encourages them spare cash while it will also facilitate those who are putting the exchanges, they will get more business. There are different contentions that fast exchanging can prompt higher expenses for speculators nonetheless.
Fiber optic interchanges, quick figuring force and reason manufactured applications all add to executing exchanges rapidly.
While the pace of innovation change in the budgetary division may be ease back in respect to different regions, despite everything it has an extremely critical effect.
Regardless of whether we understand it or not, advancements in innovation for the managing an account segment influence us consistently.
To stay in the lead, money related and finance administrations associations must acknowledge and adjust to the way that the client base they serve is experiencing a noteworthy move as far as purchasing practices and inclinations, a lot of which is being driven by the computerized innovation transformation, especially online networking and portable. Era Y, for instance, needs more decision and control by the way they interface with a bank or insurance agency, regardless of whether it act naturally coordinated, web drove, individual to-individual, on the telephone or in an office. Accordingly, organizations must change their customary models and items to benefit this developing and evolving client

Back to Basics | Mergers & Acquisitions

Posted on by Imarticus Learning

This is the classic investment banking product offering and involves providing advice to businesses, private investors, government agencies, private individuals and families in divesting and acquiring assets. Advice is provided on a full range of transactions including mergers, sales, buyouts, divestments, leveraged buyouts, joint ventures, raid defenses, spin-offs.
The range of services includes origination of assets to acquire, structuring, negotiation, due diligence right up to documentation and closure. The banker or a team of bankers work side by side with the company often even in charting out their growth strategy before they decide to pursue inorganic growth.
Large bulge bracket M&A teams in Goldman Sachs, JP Morgan etc often have two parts to their business- Origination & Execution. Origination involves the sourcing of deals, which includes business environment analysis, company research, pitching and agreeing on terms. Once a deal has been sourced and the target/strategy agreed on the execution team steps in to validate, value, structure and close.
To understand how interconnected the entire spectrum of banking is, we will use the example of Company ABC. ABC is bottling Water Company undertaking a huge organic and inorganic expansion plan. This strategy in itself might have been formulated with the help of a consultancy firm like McKinsey or Monitor. Once a strategy has been formulated,  ABC  retains an M&A team to chart out its inorganic strategy and put out a criteria list. The M&A team will then scout the globe and bring back a laundry list of possible  matches according to the criteria list. They shortlist and start contacting the companies, or their respective bankers and after a lengthy process of sharing preliminary information, they zoom in on XYZ Water Company to be a suitable strategic asset for ABC. The M&A team will now engage, value, and handle the entire transaction on behalf of its client from here on out till closure. Closure includes signing on the dotted line and the fulfillment of conditions precedent (Essentially terms that need to be fulfilled for money and shares to exchange hands)  Lawyers play a significant role in M&A as well and work in tandem with the M&A team especially in Due Diligence and Documentation.
This brings us to our IFAP course why it is different from other Financial Analyst Courses.  Our IFAP course covers this entire process in detail and will equip you with the tools required to understand and run this process effectively. We will teach you how to research companies, how to value them and use financial models in an M&A transaction. We will take you through the concept of synergy and control premiums. Finally we will take you through the salient points of documentation.

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