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Tag: investment banking courses in india

Working in a Boutique vs a Bulge Bracket Investment Banking Firm

Posted on by Imarticus Learning

There has been a lot of news in the media recently about how investment banking fees are at an all-time low and how those multi-million dollar bonuses are about to take a beating. But recently the Financial Times noted how boutique banks like Evercore and Moelis are doing well, and are attracting a great deal of interest.

Firms like Centerview and Moelis have even broken into the top 20 fee earners. But what are boutiques? What is it like working for one and where can you possibly go?

What are boutiques?

Boutiques are independent investment banks that have often been created by senior investment bankers. Houlihan Lokey, the largest boutique in the world, was created by ex-banker Scott Adelson. They often play on the founder’s strength, industry vertical specialization or regional focus, and focus primarily on deal advisory – M&A, Capital raising both in the public and private markets, restructuring and corporate finance.

Boutique banks call themselves independent and without conflict. Essentially this means because they focus only on advisory, there are no conflicts with regard to public trading. So they will never be in a position where they might be advising company A on sale while another department trades that stock.

Boutique structure

They are often top heavy, filled with rainmakers and senior bankers and feature a flat organizational structure. What does that mean? That means as an analyst you are going to work very hard but also gain more exposure while you put in the hours.

Analysts and associates are treated like resources, which are farmed out to deals. In a bulge bracket, it’s quite likely you will spend all your time creating pitches. In a boutique however, because of the flat structure, you might even be asked to come into meetings, be part of the execution and learn something.

An investment banking deal is made up of four parts- Origination, Execution (Marketing) and Execution (Negotiation) and Closing. A bulge bracket is often divided by Origination and Execution, which means you are either going to be making pitches or information memorandums.

At a boutique, industry specialists often divide teams and so if you belong to one team, you will find yourself doing work across the deal process, which means you learn more. Pay is also a little different. Boutiques pay less at the entry level but your potential to earn gets higher closer to the top because bonuses become a large part of your pay structure.

Close a deal and you earn a significant portion of the bonus pool, which is of course spread across a smaller base than at a bulge bracket. You might earn more at a bulge bracket but you will learn less.

How about career progression?

Since they are flat structures with fewer options in terms of departments, there’s much less bureaucracy and more transparency with regards to promotions. But because there are fewer departments and not that many levels, there’s not that far you can go. But that doesn’t matter.

Associates and VP’s in boutiques can often be seen heading to bulge brackets if they don’t find proper career progression at their old firm. Because of their intensive deal experience, they are quickly absorbed into both Private Equity and Bulge Bracket investment banking teams both in the Equity Capital Market and Corporate Advisory.

What are India’s top boutique banks?
Avendus Capital, MAPE, Veda Corporate Advisors, O3 Capital, Spark Capital, Dinodia. You also have global boutiques like Lazard, Moelis and Co and Houghlin Lokey.

The Benefits of a CISI Certification with Imarticus Learning

Posted on by Imarticus Learning

The Chartered Institute for Securities and Investments is considered to be the leading professional body, globally, for securities, investment, wealth and financial planning professionals. Founded in the year 1992 by the London Stock Exchange, today, it has taken up the role of a global community, spanning around 116 countries and boasting of about 40,000 members. It was conferred the title of ‘Chartered Institute of Securities and Investment’ in the year 2009 when it was granted a Royal Charter. Headquartered in London, this global professional body has its offices spread over various countries, including Sri Lanka, India, Singapore, Dubai, and Dublin.

This professional body is known to offer close to 40,000 CISI qualifications every year in around 70 countries, to qualify for which candidates have to take the Computer Based Test in the various centres worldwide. Apart from this, it is also the chief examining body in the industry and thereby, offers a number of industry memberships and training to the qualifying candidates. Apart from offering qualifications, the CISI is also known to offer, the CPD scheme, also known as, Continuing Professional Development scheme, which is basically rewarded to the members of, every level of seniority, geographical location, as well as industry specialization. The institute is known to have certain charitable objectives, which are as follows;
“To promote, for the public benefit, the advancement and dissemination of knowledge in the field of securities and investments to develop high ethical standards for practitioners in securities and investments and to promote such standards in the UK and overseas to act as an authoritative body for the purpose of consultation and research in matters of education or public interest concerning investment in securities.”

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Being a member of this prestigious organization, sends out a message to all your clients and colleagues, including the wider public, that you as a professional, are committed to professionalism, integrity, and excellence. Becoming a CISI endorsed member is the most beneficial in terms of networking for a professional. One can easily access the international network of 40,000 financial practitioners.
Apart from this, the CISI body organizes a number of formal mixers, like forums, events, and other social media activities, which involve and encourage their members to build an array of networks and connections, with similar professionals from across the country. Any professional who is affiliated by the designations of CISI can meet up and keep abreast with the current happenings in the financial markets, while at the same time can also discuss them, with the top level delegates from across the world at any given point. The CISI body also offers a number of training courses apart from its social events and conferences. In order to get an entry into this elite bunch of people, one has to acquire the much coveted CISI certification.
International Certification & Placement You will receive the industry endorsed Certified Investment Banking Operations Professional (CIBOP) certification and the optional CISI certified IOC (Investment Operations Certificate). The Imarticus Learning Career Services and Placements team provides you guidance and assistance throughout the program, giving you the best career opportunities in leading international firms.

Banking Domain Primer

Posted on by Imarticus Learning

By Zenobia Sethna
The Banking, Financial Services and Insurance (BFSI) sector is the backbone of the Indian economy employing approximately 4.5 million professionals. If you are looking for a career in Finance, you will see vacancies listing “Banking Domain Knowledge” as a requisite. But what does it mean? Banking itself can be of multiple types based on products and services on offer and the type of customers serviced.
For simplicity, one may define banking domain knowledge as the body of knowledge dealing with how different banking segments operate – across customers, sales & distribution, products & services, people, process and technology. This definition basically covers the end to end functioning of any bank.
Investment Banking Course
Let’s take a closer look at the operating model of a bank.
• Banking Segments – Broadly we have four types of banks: retail banks, corporate banks, investment banks and private banks. These are known as Banking segments.
• Clients – These are the customers who buy the bank’s products or services. These may be individuals looking to open a bank account or Institutions or other Banks looking for more corporate solutions or ways to invest their funds.
• Sales and Distribution Channels – This includes how the bank reaches out to its customers to make sales. This could be through emails, phone calls, on the Internet, TV ads etc.
• Products and Services – Products and services are the things the bank sells to customers for a fee. These would vary according to the banking segment. In retail banks, we would have products like deposit accounts and loans.
• People, process and technology – Finally we have the three components that underpin all of the above. These are people, processes and technology. People includes job roles and responsibilities, organization structures; processes define how customer transactions are fulfilled and what procedures to follow, while technology defines the IT infrastructure and systems that support the business.
Imarticus Learning offers many courses on Investment Banking and Retail Banking covering the multi-faceted functioning of these banks and their products and services. Contact us to know more.

Investment Banking – Why do Sellers use an Investment Banker? (I)

Posted on by Imarticus Learning

If you looked at the economic times headlines today, you would have read how the Government has shortlisted three Investment Banks, also known as Merchant Banks, to manage the stake sale in the SUUTI portfolio companies. (Source)
This means the government has mandated Citibank, Morgan Stanley, and ICICI Securities, to sell their minority stakes in various listed and unlisted entities on their behalf. What does this mean? And how would the transaction take place? In this post and the next series of posts, we will try and understand how a deal takes place, what happens and what Investment Bankers actually do. These posts will help you prepare for Investment Banking and Corporate Finance interviews as this is a common question. This is part of our interview prep module in our FMVC course at Imarticus Learning, one of India’s leading Financial Modeling and Valuation courses.
Why do they need a banker at all?
I mean after all who knows your company best, you or an outsider. You, of course. And why should you really pay 4 percent of what you get to someone when you could do it yourself. Well Investment Bankers add immense value to a deal and this is why most major transactions use one.

  1. Most companies don’t have the expertise– Investment Bankers bring with them specialized knowledge on how to sell something. How to package a product in a way that showcases it best to optimize value. But how do they know the company well enough to do that? Well, they work very hard to gain both a broad working knowledge of the industry and specific knowledge about the sector. So yes, while you know your company very well, they probably know the industry, your competition, both domestic and international as well as you do and perhaps even better in some cases.
  2. Most companies don’t have the time– Are you going to focus on running the company or selling it. Selling a business is an extremely time consuming process from gathering all the information, to putting it together in one place, to contacting buyers, scheduling meetings, doing site visits and taking care of documentation. It’s also an important job; you can’t just put your EA on it, however good she might be. So do you pull your most efficient person out of their current job, or are you better off hiring someone who does this day in and day out?
  3. Being objective– Value is a very subjective thing. You might believe your company is work x but the market and the buyers might value it at Y.  Because you are too close to the transaction, sellers find it very hard to take an objective view because the value of a company is marred by conflicts and emotions. Yes, finance is a minefield of aspirations, attachments, ambitions, hard work, years of toil and legacy. Less said about inflated egos the better. So having a banker that can assess value from the outside is not just helpful but critical in achieving your objective.

 

Target to Securities

Posted on by Imarticus Learning

By Abhinit Kumar.
Financial market is known for its constant changes. Since its inception, it has seen many changes in terms of financial reporting to regulators, risk or the way client’s assets are managed. Post Lehman collapse, the industry has seen one of the biggest changes in the way how derivatives markets are managed and how banks can indulge in proprietary trading under Dodd-Frank.
And yet again there is a new change being brought in the way securities trades will be settled in the euro zone knows, as introduced in finance courses in India, as Target to Securities (T2S).
T2S is in fact a new European securities settlement engine which will allow delivery-versus-payment (DVP) settlement in funds across all European securities markets much in similarity to DTC market in United States. It is expected to go live in 2015.
Reason for introduction of T2S is that currently all the securities trade in euro zone settle differently and authorities now want to make it more uniform settlement process.
In the past, European financial market was created to meet the requirements of national financial markets. In most cases, there were one or two dominant players at each stage of the value chain: typically only one stock exchange for trading, possibly one central counterparty (CCP) for clearing and at least one central securities depository (CSD) for settlement. Furthermore, each of these national infrastructures was primarily designed to manage securities that were denominated in the national currency.
Despite the introduction of the euro over a decade ago, the provision of clearing and settlement remains heavily dependent on domestic settlement.
Investors still trade mostly in domestic securities and in domestic currency. This does not provide an optimal settlement process in the euro zone and due to which the risk is still concentrated and not diversified which arise due to single currency.
So initially even United States was in a very similar position long time back, with a fragmented trading and post-trading infrastructure. The inefficiencies post trading system eventually took its toll and US government had to take measures to consolidate this fragmented. The US now has a consolidated trading and settlement environment, with the Depository Trust & Clearing Corporation (DTCC), responsible for the clearing and settlement of all equities and corporate bonds, and the Federal Reserve System responsible for government bonds. Very soon investment banking courses and training across financial courses,  MBA etc will need to start including this topic into their content to provide learners and readers with first hand information.
The EU authorities though have so far not taken any such dramatic steps. The initiatives taken up to now have focused on removing the domestic settlement process. Market forces would determine the optimal market structure, whether this is a single provider, as in the US, or multiple providers. The most important initiatives from the EC are the Markets in Financial Instruments Directive (MiFID) and Code of Conduct for Clearing and Settlement.
T2S is intended to complement these existing initiatives by improving competition, better price transparency and also improving current practices across Europe. Settlement has traditionally been the domain of national depositories, so it was difficult for a depository in another country to gain access to these securities. By creating a pan-European platform, T2S aims to improve these challenges between national markets in a way which could not have been achieved by the MiFID or the Code of Conduct on their own.
Also, with introduction of T2S in the school of investment banking is expected to get boost with more job opportunities getting created across operations.

Current workflow structure
Steps Involved
1-IB will execute trade with brokers
2-At the same time they will contact their custodian bank to provide trade details
3-Custodian will then inform clearing broker to ensure trade matching and settlement is done by them.
4-Both executing broker and clearing broker will match the trades and ensure settlement is done.
5-It is currently the job of clearing broker that trade matching is done on domestic exchanges and inform of any disparity.

New workflow structure
Steps-
1-All the steps remain same as per the old structure, but the clearing broker will not be part of the trade settlement process.
2-Custodian and Executing broker will directly be involved and settle the trade via new platform.
3-This will then ensure that trade can settle without the involvement of domestic exchange and improve cross border settlement process in EURO currency.

Visit our website to know more about our investment banking courses in India.