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Tag: Investment Banker

What do Investment Bankers Really Do?

Posted on by Imarticus Learning

Investing banking division is a specialized segment in the banking and finance industry that primarily focuses on raising funds for companies by connecting them with investors.

The investment banking field has shown exponential growth in the last few decades as we progress towards a more globalized world where funds can be free transferred between economies of different nations. The role of investment bankers is also very crucial as a lot depends on the performance of investment banks.

So what do investment bankers really do? The role of an investment banker is very dynamic and encompasses a range of activities such as helping clients to raise money, analyzing the market, networking with prospects, financial analysis, financial advisory, etc.

Let’s understand this more contextually by analyzing the functions of investment banks and how they add value to the economy’s growth prospects.

Investment banks as underwriters

Investment banks provide underwriting services to companies who are about to go public with their Initial Public Offer. Underwriting can be explained as a process in which an individual or institution takes a certain financial risk for a premium or fee. The risk element might include loans, insurance or investments. Now, before taking such risk the modern-day investment banks conduct thorough research to find out the degree of risk associated with a particular deal.

This extensive research will help to set an optimum premium amount on the financial transactions. In case of investment banks working as underwriters, they are required to raise the capital amount for their clients from investors by issuing either debt or equity securities. There are three types of underwriting commitments provided by investment banks to their client these includes firm commitment, best efforts, all or none. Let’s explore this in details.

• Firm Commitment
In case of a firm commitment underwriting service, the underwriter has the full responsibility to buy the entire stock issue at a fixed price decided in advance based on the research. Even if the underwriter fails to sell the entire issue they have a legal obligation to accept the deal.

• Best Efforts
In case of best efforts, the underwriter commits to sell as much of the issue as he can but without any legal financial obligation. This means that if the stock issued is not fully subscribed by the public then the investment bank will not have a legal obligation to pay for the unsubscribed shares to its client.

• All or None
This is a very special case of underwriting where the deal stands canceled if all the stocks issued are not sold out. If the stocks are not sold to the buyers are the predetermined price then the underwriter will not receive any form of compensation for their services.

Mergers & Acquisition services
Investment bankers play a significant role in facilitating mergers and acquisition deals between two or more companies. The investment bankers play a crucial role by determining the fair price or value of companies involved in the M&A deals. This requires conducting extensive research, studying the industry and competitors, identifying the financial position of the company, and a lot more.

A strategic plan is needed by organizations who want to acquire or merge with companies in the same domain. This is where investment banks come into the picture and add value by leveraging their network and professional expertise to find out potential target companies.

In addition to this, the investment bankers also guide their clients involved in the deal on how to finance the M&A deals. They study and design a suitable capital structure for their clients and also guide on financing methods to maximize profitability without diluting ownership.

Also Read: Prerequisites For Becoming an Investment Banker

Why Do So Many People Want to Go into Investment Banking?

Posted on by Imarticus Learning

Before jumping over to why so many people want to pursue a career in Investment Banking, let’s peep into what Investment banking entails and what it takes to be an investment banker.

What is Investment Banking?

The investment banking segment is the strongest pillar of the finance and banking industry. It propels the wheel of the economy by acting as a mediator between corporations seeking fund and investors looking to park their wealth. This channelling of funds is on a very high scale and involves high profile individuals, corporations and government bodies.

Investment banking is a specialised segment of the banking industry that deals with high stake investments and provides financial guidance to investors. In addition to this investment banks also help to facilitate IPOs and M&A deals by leveraging their large professional network and financial expertise.

Given the crucial function that the investment banks perform, people are keener on pursuing a career in this industry. How can you get a job as an investment banker? It is a common question among individuals who are aspiring for a career in this domain. Well, the answer to this question is very subjective and requires personal evaluation.

If you are still in the early phase of your career development, you can opt for a bachelor’s degree in statistics, economics, mathematics, commerce, or any relevant discipline. You can boost your prospects for a job just after graduation by enrolling for an investment banking certification course.

Investment banking certification provides you with a comprehensive understanding of the investment banks. In addition to this, it imparts you with relevant technical skills and practical industry exposure. This can help you stand out of the competition by demonstrating your specialised skillset.

Why Investment Banking?

Investment banking is among the most prestigious career opportunities in the finance and banking industry. The investment banker title has its charm; it is also considered among the most rewarding career opportunities out there. So why is it so popular among people who want to pursue a career in finance?

Well, most people are lured in by the fat cheques that the investment bankers make. Some people are simply passionate about working in the investment banking industry and some are driven by the investment banker lifestyle. There are various reasons why people join the investment banking industry but the majority is looking forward to making good money. It is among the few professions where simple graduation in disciplines like economics, statistics, mathematics, etc. can help you earn 6 figures income.

The Investment Banker Lifestyle

One of the most prominent reasons why young college graduates want to pursue a career in this industry is because they want to enjoy the investment banker lifestyle. Investment banking is known for its compensation, it’s is far higher compared to any other industry’s professionals at a similar level. People are attracted to the glamour and charisma attached to this role, the high-profile parties and exotic island hospitality is more than enough to jump into this field.

The Status Quo

Investment bankers are usually involved in high-profile deals and they work with high-net individuals from celebrities to entrepreneurs, this gives them exclusive access to information and people. The title of an investment banker is held in very high regard by people around us. It helps to demonstrate a distinguishing trait, a title held by only a few percentages of the population makes you stand out from the crowd.

Passion-Driven

Some people in this industry are simply driven by passion more than anything else. They like to crunch number and look at stock indices and analyse stocks. They usually want to work in the finance sector from a young age. In addition to this, they are good at their job and thus they enjoy fairly higher compensation.

Also Read: Scope of Investment Banking

What Do Investment Bankers do All Day?

Posted on by Imarticus Learning

Conventionally, investment bankers are responsible for interacting with clients, creating offers, handling financial forecasts, and managing sales books or pitch books created by the organization to aid reach new clientele.

The intensifying need for exceptional communication skills is what makes investment bankers different from financial analysts and accountants. Myriads of business students can receive investment banking certification and perform the technical responsibilities of investment banking associates, yet some possess the skill of assisting senior staff and clientele.

Morning Hours

The morning time is the most stable and is usually burdened with office meetings and administrative emails. Replying to loads of messages further adds to the stability of investment bankers’ day.

Thankfully, a majority of working days begin rather late for investment bankers, partially because the US capital markets open after 7 in the morning, and also because a majority of bankers work late at night. As such, investment bankers have enough time to get ready and have a healthy breakfast before heading to the workplace. As most of the investment-banking jobs are situated in densely populated cosmopolitan cities, investment bankers need to make ample time for the commute.

Work during morning hours is often relatively sluggish and more organized versus that during the evening. From the beginning until lunchtime, analysts and associates handle firms’ assessments and make changes as per the senior staff.

During off days, the junior bankers might take time for leisure and break and even browse further investment banking certification courses but they cannot use social media platforms as most investment banks create firewalls for such distracting websites.

Afternoon Hours

If the day is not much demanding, lunchtime can typically stretch to 45 minutes or an hour at a nearby eatery or building’s cafeteria. Breaks normally occur somewhere between 12 pm – 2 pm and are generally spent with colleagues with similar designation level.

There should be updated presentations and models from respective analysts by the time investment bankers get back to their desks. Now, they have to go through these documents and suggest corrections before handing them back to the analysts.

Work during afternoon hours highly focused on active deals. Investment banking teams are provided one deal at a time, which is the live deal, and senior staff is critical about crossing and dotting every appropriate letter. Merger and acquisition (M&A) and initial public offerings (IPO) deals consist of transacting millions or billions of currencies, thus, firms cannot think of committing small errors.

Evening Hours

The latter half of the working day is split into two categories: before and after dinner. Investment bankers mostly have their dinner at the workplace around 7-8 pm. Work before is more organized and anticipated; analysts expect that associates accomplish their tasks by early evening so that they can review them again.

On a usual day, the initial after-dinner job is to review the morning’s work. Senior bankers and analysts dedicate the past few hours checking material stuff and creating remarks, which, at times, involve significant revamps to the sales book.

Investment bankers collaborate with many different professionals including, sales staff or equity research. Nevertheless, the evening hours are majorly spent with desktop publishing (DTP) division.
The revision-comment-correction process can recur twice or thrice before the night ends. Investment bankers have to contemplate thoroughly and work at a rapid pace to make sure the documents are edited accurately and on time.

Most of the banks offer car services for their employees to take them to their homes in the early morning hours. While senior investment bankers can leave the office at 10 pm, their junior counterparts usually go home around 1 am-3 am.

What Softwares Do Investment Banker Use?

Posted on by Imarticus Learning

The investment banking sector is a branch of banking and financial services industry that helps organisations to raise funds and also provides advisory and consultancy services on an array of financial instruments available by assessing the needs and risk appetite of individuals and firms.

The role of an investment banker is among one of the most sought after job roles in the banking and financial industry, the high level of compensation and other rewarding perks certainly makes it one of the most lucrative career options and naturally it attracts a lot of competition.

The role of an investment banker is very diverse and dynamic, to say the least; it encompasses a range of responsibilities that the personnel need to adhere to. We are living in an era of the digital buzz; everything has its presence online and needs technology for escalation. The investment bankers also need to use many tools for smooth conduct of their operations. Before jumping over to the tools and software used by them let’s get a brief about what their role entails.

Roles & responsibilities of an investment banker

The job of an investment banker requires you to play many roles at once. At the centre of it all is the responsibility to raise money for your clients by finding suitable investors who have the required capital for long term investments. The role of an investment banker here is to act as a mediator between the company that is looking to raise funds through issuing shares and the investors who are looking to invest in profitable investment opportunities. Finding the right match and bridging this gap requires a lot of backend work that involves complex research and analysis of the company and the market.

Investment Banking Career

In addition to raising capital for clients, the role of an investment banker also entails guiding and helping companies on Mergers & Acquisition (M&A) deals. In the most basic terms, Mergers & Acquisitions help is the consolidation of two companies for positive synergies. When two or more companies join hands to combine their operations and form one entity it is termed as Mergers. When one company buys the other it is coined as an Acquisition deal. Mergers and Acquisitions are done to reduce competition in the field and collectively profit more from the combination of two entities instead of individually operating.

Other roles of an investment banker include working in an advisory capacity and guiding individuals and firms on profitable investment opportunities and complex securities that are comparatively new and have been developed due to financial innovations. Now that you understand the complexity of the role of an investment banker you have a fair idea as to what all they need to do on a daily basis, let’s get familiar with some of the essential software that investment bankers need to do their job.

Software used by Investment Bankers

Below is the list of some of the most essential tools that are required by investment bankers for smooth functioning:

Bloomberg Terminal

The Bloomberg terminal is a computer software system that helps the investment banker to collect relevant data with lightning-fast speed. What’s new today is stale tomorrow; the Bloomberg terminal helps to obtain real-time data, analytics and news to help investment professionals to make a smarter and accurate decision.

Thomson Reuters

In the digital world data is the real deal, the more data you have the more accurate your decision making gets. A considerable amount of time is spent by investment bankers in doing research and data analysis, the more you know the better your client will fair. Another tool in the pack for data collection from various companies in a considerably low amount of time.

Microsoft Office

Financial modelling is a big component of the investment banking industry, financial modelling is a type of mathematical model that helps in representing and projecting the financial performance of businesses. Microsoft Excel helps a great deal in this regards. Other Microsoft tools are MS Word and MS PowerPoint that helps to gather and present information.

Stock Market Eye

Stock Market Eye is a portfolio and tracking management software that helps individual investors and asset management professionals to keep track of their portfolios and assess the market to manage and update their portfolios effectively.

InStream

This software offers cloud-based wealth management and financial planning tool. It brings utility by helping financial advisor with planning, reporting and assessing market trends.

Scope of Investment Banking in the Next Five Years

Posted on by Imarticus Learning

Scope of Investment Banking in the Next Five Years

Investment Banking is certainly an up-and-coming career option that is increasingly widespread among the youth in India. An investment banker, in simple terms, is someone who helps their clients invest their money in a way that will help them generate the highest possible revenue. These jobs include a lot of responsibility such as handling debts, stocks and bonds, mergers and investments, securities and derivatives.
Are banks secure? Have we got the proper regulatory system? These are a few fundamental questions that need to be acknowledged if the investment banks are to become strong and secure enough to endure a positive growth in the next 5 to 10 years. Our industry has to validate the fact that when designed and run properly, with appropriate regulations, banks can be socially vital and useful.
Undoubtedly, the field of investment banking is sure to have a great scope in the future. But the precondition for the same is strong ethical etiquette, which not only has to be implemented but also followed closely. The bigwigs of the industry must be able to intensify the foundation of the banks appropriately to prevent them from being affected by anything in the future.
The global growth of this industry over time has led to a thriving financial sector.Today, India’s economy is growing rapidly with infinite multi-national companies setting up businesses around the world. This has accelerated numerous unoccupied positions for students who specialise in investment banking.

Future of Investment Banking in Next Five to Ten Years

Investment banking is most likely going to get a prominent facelift in the coming decades. Some instances are mentioned below:
• With the advent and incorporation of technology into the financial sector, many manual processes will be structured in a more organised manner
• Processes linked to regulation, compliance and due diligence will be streamlined through the likes of AI and automation
• There will be a reduction in fees with the decline in the requirement of intermediaries
• With the use of online platforms, accurate information will be delivered using matching algorithms resulting in inefficient transactions and higher accuracy
• Private security debt along with equity liquidation issues will see a positive outcome due to the blockchain tech solution of tokenisation

Type of Education Required to Become an Investment Banker

Any individual considering this career path doesn’t require any specific stream. A bachelor’s degree is the minimum requirement to work as an investment banker. Assignments and projects in finance, economics, and mathematics is highly recommended. Concerning higher education, any aspiring investment banker should have an MBA degree. Several institutes provide diplomas and certificates. There are investment banking courses as well which will improve the financial fluency so that an individual can speak the language of an experienced professional after starting or advancing a career in Investment Banking and Finance.
In addition to these, refining the communication and presentation skills will also benefit immensely. Investment bankers are required to do extensive research on the market and thus need to possess research and analysis skills as well.
Conclusion
Investment banking jobs can be esteemed, lucrative, and thus ambitious. This career path takes an ample amount of dedication and commitment, and not one that should be entered into carelessly.
Apart from powerful competition right from the entry-level investment banking graduate programs, one must also gain industry knowledge and experience thoroughly, while completing the respective studies to have a successful and lucrative career in investment banking.

Also Read: Career and Scope in Investment Banking

Is Investment Banking the Highest Paying Job?

Posted on by Imarticus Learning

Is Investment Banking the Highest Paying Job?

Investment Banking is an exciting and thriving career. Every year, lots of brilliant minds from the world’s finest universities, decide to enter the world of investment banking.

Venturing into the competitive world of high finance has some well-defined merits; great pay, esteemed deals, and remarkable training. For many, investment banking is a profession that gives the best of all – job satisfaction, money and a reputable way of life.

Expensive apparels, expensive valise and a walk with pride are just the outward attributes of an investment banker course.  These days, many are two-fisted to join the extremely competitive and demanding aide of an investment banking company. This is mainly because a career in investment banking is very beneficial and rewarding.

Several educational institutions are also providing investment banking endorsements to help support the entry of candidates who wish to pursue a career in this sector. Creative, brilliant and idealistic – these are some of the qualities that many banking firms look for in a candidate.

Being an investment banker is one of the best-paying jobs available today, which means, in terms of salary, it outstrips other jobs by a huge margin. That said, the role of an investment banker is no walk in the park – it is also one of the hardest jobs there is.

The investment Banking sector is constantly on the lookout for individuals who have had investment banking training, are productive, committed, and ardent. It is a field with fierce competition, long working hours and therefore only those individuals who acquire these qualities will thrive. The field also demands individuals with high communication skills, can build and promote relationships, and make quick thoughtful decisions at each step of the journey. However, the learning process is endless, and the list could go on and on.

Investment Banker Salary

The biggest reason many individuals join this sector is that most of the banking and fintech firms provide lucrative salaries to both fresher and experienced professionals. This is primarily because these are the individuals who deal with money predominantly. All are highly ambitious and paid hefty pay cheques which can support a lavish lifestyle.
The below salaries represent the compensation average of the investment banker

  •  An Investment Banker having an experience of less than a year can earn a salary of around ₹553,500
  • An experience of 1 to 4 years in the Investment Banking field can earn the individual an average compensation of ₹687,845 (approx.)
  • An Investment Banker with a work experience of five to nine years can earn a salary of approximately ₹1,300,000
  • And finally, a senior level Investment Banker with experience of 1-2 decades can earn a compensation of ₹3,000,000 (approx.)

If you want to be a part of the dynamic world of banking, are excited by numbers, and want the coveted lavish lifestyle, then investment banking is a wonderful career choice. As a baseline, it can be an incredible training ground for entry into other professions. However, if investment banking doesn’t sound like you, then it’s time to look out elsewhere.
After all, nobody said making millions of dollars would be easy.

Also Read: Career & Scope in Investment Banking

What are the Top 10 Tips to Become a Pro Investment Banker?

Posted on by Imarticus Learning

What are the Top 10 Tips to Become a Pro Investment Banker?

With the opportunity to work with some of the biggest names in the world, a lucrative salary and top-class industry exposure; investment banking has its perks and how! Quite a stark contrast to run-of-the-mill banking jobs, an investment banker transacts at the highest financial level, which governs the overall economy to a huge extent. Starting from processing how to go about when the government is issuing stocks to ensure maximizing revenue to the highest possible extent, a career in investment banking seamlessly blends intricate professionalism into industry experience, something that an investment banking course will teach you some of. At the end of the long, and often a hard path, there lies a solid paycheck and of course rapid ascents up the promotion ladder. How do you make it that far? Read on for tips on becoming a pro investment banker:

● Necessary education– While this does not put a bar on your educational qualifications, it definitely means you need to have a strong foundation in mathematics, accounting or any other subject related to finance, to pursue a career in investment banking. Most bankers start out with a degree in accounting, economics or finance; however, a relevant post-graduate degree is like an added feather to your cap. A Masters’s in Finance or an MBA degree from IIM A/B/C coupled with a certification CFA (Chartered Financial Analyst) course will add to your advantage, as well as to the recruiter’s preference for your resume over others.

● Build your skills early– Never stop learning. Keep yourself versed with all developments in the industry of finance, be it in the national or global economy. Gain an understanding of market movements, how the fluctuation of stocks has an impact on financial technology, along with the impact of data collection and analysis on a company’s business. Along with your regular investment banking course, it is advisable to take up additional management courses, gain knowledge about the basics of the law, practically work with financial models, and learn a global language if you wish to expand your career horizon to another country.

● Networking– Start your networking young, have a social presence on Twitter and LinkedIn, and follow influencers in your field who you feel can help with insights into the world of investment banking. Start a blog, gain followers on your social media accounts, and attend seminars and events in and on behalf of your college! In short, do not miss out on any opportunity that may lead you to meet new contacts, build connections and networking.

● Seek work experience- Bagging an internship or a work placement programme with a good investment bank, right at the start of your academic schedule is advisable. You can try and test between different departments at larger firms to see which aspect of the field you enjoy working in, the most. Start out with one internship every alternate semester in financial regulation, investment or trading.

● Financial reporting knowledge– Studying and interpreting financial reports will involve a major role in your job profile even while decision-making on behalf of the company. You need to be able to interpret and decipher financial reports and their hidden values.

● Budgeting– As a finance professional, you have to know the basics of budgeting, which include analysis of forecast budgets and spending budgets. You have to also understand, and be able to relate the company’s expenses with the aims and objectives of the organisation. An investment banker also needs to be adept at budgeting- for the organisation, different departments or for projects as required.

● Forecasting– Prediction of upcoming risks, forecasting the best decisions for the company along with insights into your vision for the near future can help you steer your department or the entire organisation as a whole, in the right direction.

● Data analytics skills– Multiple organisations today expect young professionals to have data analytical skills in the contextual application of big data analytics. For the sake of future proofing professionals, data analytics has forayed its way into investment banking, equity research or financial planning as well.

● Knack for innovation– While investment banking is pretty straightforward as a profession, there is also room and appreciation for bringing about innovation in day-to-day processes. A fresh presentation, a new approach to preparing a report or an added perspective to a situation goes a long way to strengthen your role in the organisation.

● Confidence– The most underrated yet important of all tips, is confidence. Your resume is top-notch, you have industry knowledge, expertise and required qualifications; the only thing you need to sign off is an ample amount of confidence while presenting yourself for an interview or a test, and you are good to go.

Also Read: How to Become Investment Banker