Investment Banking: Top 7 things that you must know

investment banking

Contents

What is investment banking?

Investment banking is the division of a bank or a financial institution that provides underwriting, M&A and other financial advisory services to governments, corporations and institutions. It acts as the middle man between investors and companies (who are looking for capital to fund and grow their business). Investment banking jobs are one of the highest paid jobs in the world.

Services offered by investment banks

Full-service investment banks in India and abroad offer a wide range of financial services that can be broadly categorised as:

  1. Underwriting

Underwriting or capital raising is one of the primary services offered by investment banks in India and abroad. It helps corporations to go public and raise capital through the issuance of IPO, stocks and bonds to investors. Investment banks help to market the company and its products to potential investors. In return they charge a commission on each sale of stock or bond from the company.

  1. Mergers & Acquisitions (M&A):

Investment banking companies also help in the buying and selling of businesses. These companies use their extensive networks to help their clients find the best buying/selling opportunities.

  1. Sales & Trading

These banks help to match buyers and sellers of securities in the secondary market.

  1. Equity Research

Investment banks do a comprehensive market study and come up with detailed reports/analysis for various companies. Based on such reports, investors can make informed decisions on the stocks that they want to buy or sell.

  1. Asset Management

They also help to manage the investment portfolio for a wide range of investors including institutions and individuals.

Skills required in investment banking

Investment bankers are expected to have a niche set of skills that include financial modeling and valuation, pitchbook presentations, negotiation skills, excel building skills, etc.

Below is the list of skills that are required for an investment banking professional:

  1. Financial modelling

Performing a wide range of financial modeling activities such as building 3-statement models, discounted cash flow (DCF) models, LBO models, and other types of financial models.

  1. Business valuation

Using a wide range of valuation methods such as comparable company analysis, precedent transactions, and DCF analysis.

  1. Pitchbooks and presentations

Building pitchbooks and PPT presentations from scratch to pitch ideas to prospective clients and win new business.

  1. Transaction documents

Preparing documents such as a confidential information memorandum (CIM), investment teaser, term sheet, confidentiality agreement, building a data room, and much more.

  1. Relationship management

Working with existing clients to successfully close a deal and make sure clients are happy with the service being provided.

  1. Sales and business development

Constantly meeting with prospective clients to pitch them ideas, offer them support in their work, and provide value-added advice that will ultimately win new business.

  1. Negotiation

Being a major factor in the negotiation tactics between buyers and sellers in a transaction and helping clients maximize value creation.

Also read: 6 best products for investing in India

Investment banking companies

Below is the list of top 100 investment banks in the world:

  1. ABN AMRO
  2. Allahabad Bank
  3. Allen & Company
  4. Bank of America Merrill Lynch (BAML)
  5. Barclays Capital
  6. BB&T
  7. BBY Ltd.
  8. Berkery, Noyes & Co.
  9. BG Capital
  10. Blackstone
  11. BMO Capital Markets
  12. BNP Paribas
  13. Cantor Fitzgerald
  14. Capstone Partners
  15. Centerview Partners
  16. China International Capital Corporation
  17. CIBC World Markets
  18. Citi
  19. CITIC Securities International
  20. CLSA
  21. Commerzbank
  22. Corporate Finance Associates
  23. Cowen
  24. Credit Agricole CIB
  25. Credit Suisse
  26. CSG Partners
  27. Daewoo Securities
  28. Deutsche Bank
  29. Duff & Phelps
  30. Europa Partners
  31. Evercore Partners
  32. Financo
  33. Gleacher & Company
  34. Goldman Sachs
  35. Greenhill & Co.
  36. Guggenheim Partners
  37. Guosen Partners
  38. Houlihan Lokey
  39. HSBC Holdings PLC
  40. Imperial Capital
  41. ICBC (China)
  42. ICICI Bank
  43. Indian Bank
  44. J.P. Morgan
  45. Jefferies & Co.
  46. Keefe, Bruyette, & Woods
  47. KeyCorp (KeyBanc Capital Markets)
  48. Ladenburg Thalmann
  49. Lancaster Pollard
  50. Lazard
  51. Lincoln International
  52. Macquarie Group
  53. Maple Capital Advisors
  54. Marathon Capital
  55. McColl Partners
  56. Mediobanca
  57. Miller Buckfire & Co.
  58. Mitsubishi UFJ Financial Group
  59. Mizuho Financial Group
  60. Moelis & Company
  61. Montgomery  & Co.
  62. Morgan Keegan & Co.
  63. Morgan Stanley
  64. Needham & Co.
  65. NBF (National Bank Financial)
  66. Nomura Holdings
  67. Oppenheimer & Co.
  68. Panmure Gordon
  69. Perella Weinberg Partners
  70. Piper Jaffray
  71. PNC Financial Services (Harris Williams & Co.
  72. Punjab National Bank
  73. Raymond James
  74. RBC Capital Markets
  75. RBS
  76. Robert W. Baird
  77. Roth Capital Partners
  78. Rothschild
  79. Sagent Advisors
  80. Sandler O’Neill Partners
  81. SBI Capital Markets (State Bank of India)
  82. Scotiabank
  83. Societe Generale
  84. Sonenshine Partners
  85. Stephens, Inc.
  86. Stifel Financial
  87. Sucsy, Fischer & Company
  88. Sumitomo Mitsui Financial Group
  89. SunTrust (Robinson Humphrey)
  90. Syndicate Bank
  91. TD Securities
  92. United bank of India
  93. UBS
  94. Vermillion Partners
  95. Vijaya Bank
  96. Wedbush Securities
  97. Wells Fargo & Co.
  98. William Blair & Company
  99. WR Hambrecht & Co.
  100. Yes Bank.

Investment banks in India

In India, below is the list of top 10 investment banks that provide financial advisory services to clients:

  1. Bank of America
  2. Barclays Capital
  3. N.P. Paribas
  4. Citi Bank
  5. Credit Suisse A.G.
  6. Deutsche Bank
  7. P. Morgan
  8. Kotak Mahindra Bank Limited
  9. The Hongkong and Shanghai Banking Corporation Limited
  10. Yes Bank Limited.

Investment banking courses

Below are some of the popular investment banking courses that can help to get a job in one of the top firms:

  1. NCFM certifications

This is a certification course offered by the National Stock Exchange of India (NSE). The course will cost approximately Rs. 1700. After purchasing the course, you can download the course content in pdf format. You will also be able to download some sample question papers for preparation. You can search online for question papers of previous years. The exams are easy to clear. They have courses on Mergers & Acquisitions, NSE, etc.

  1. PE, M&A and Structured Finance program

The content of this course is designed by a senior Private Equity Professional. It covers the entire Private Equity life cycle. It also has an overview of M&A and a separate chapter on Project Finance. At the end of the course, you will be awarded with an industry recognized FLIP certification.

  1. FLIP-NCFM: Equity Research with Financial Modelling

This is one of the top investment banking courses offered by Flip. It focuses on Fundamental Analysis, Financial Modeling and Valuations. At the end of the course you will be awarded with a FLIP NCFM certification issued by the NSE Academy Ltd. This course is extremely helpful for candidates looking to ace the Research Analyst interview.

  1. Investment banking

This course is divided into 2 parts:

  • A FLIP NCFM certification issued by the NSE Academy Limited on issue management
  • FLIP certification on Private Equity and Mergers & Acquisitions.
  1. Excel and PowerPoint for Professionals

As mentioned above, investment banking professionals need to prepare multiple reports and presentations for their clients. This is a part of their routine jobs. Hence Excel and PowerPoint are two of the must have skills for an investment banker.

This online course will ensure that you gain a mastery over both of them. Learn from scratch, how to use Excel – manage data, use formulae, and present data effectively. It also covers functions like Goal seek, H-Lookup, V-Lookup, Pivot Table, essential for analysis and reports. It has special focus on finance related functions like PV, FV, NPV, IRR, through real-life examples. PowerPoint [2007 and 2010] – Learn about important PowerPoint features. Then, via real life examples, use these features to create an effective presentation, for projects and client presentations.

  1. Technical Analysis

If you are looking for in-depth knowledge about the complex world of technical analysis then this course is perfect for you. It covers chart patterns and indicators such as RSI, Fibonacci and Moving averages. A must for every aspiring or new equities or currencies trader in financial markets.

  1. FLIP-NCFM: Investment Banking Operations International

This course covers a wide range of topics including Investment banking operations in international markets. It includes the trade life cycle of equities, fixed income, foreign exchange, structured products and derivatives.

  1. FLIP-NCFM: Issue Management

This course covers Equities – IPOs and FPOs, Bonds, CPs and FCCBs. It takes you step by step through the process, with timelines and the regulatory requirements.

Investment banking interview questions

For sample interview questions on a variety of topics such as Accounting, Corporate Finance, Valuation, M&A, etc. refer to the below guide,

https://www.wallstreetmojo.com/investment-banking-interview-questions/

It contains a question bank of some common questions asked in interviews.