Investment Banking, Mergers & Acquistions

IIT Powai, Mumbai, India, 4rd June 2014

Presented by- Anshul DaveFounder & Managing Partner

Oceans Bridge Financial Advisory LLPanshuldave@oceansbridgellp.com

Investment Banking - Meaning

• Investment Banking – What all activities does it actually include?

Investment Banking - Meaning

• An investment bank is a financial institution that assists individuals, corporations, and governments in raising capital by underwriting or acting as the client's agent in the issuance of securities (or both). An investment bank may also assist companies involved in Mergers & Acquisitions and provide ancillary services such as market making, trading of derivatives and equity securities, and FICC services (fixed income instruments, currencies, and commodities).

• Unlike Commercial banks and Retail banks, investment banks do not take deposits.

Two Main lines of Businesses of IB

• Buy Side – It involves trading securities for cash or for other securities (e.g. facilitating transactions, market-making), or the promotion of securities (e.g. underwriting, research, etc.)

• Sell Side – It involves the provision of advice to institutions concerned with buying investment services. Private equity funds, mutual funds, life insurance companies, unit trusts, and hedge funds are the most common types of buy side entities.

Range of Services in IB -1

• Underwriting security issuance, i.e. initial public offerings (IPOs) (Traditional)

• Secondary offerings (Traditional)• Brokerage (Traditional)• Mergers & Acquisitions (Traditional) • Corporate Finance (Traditional)• Raising Funds (Both Debt & Equity) (Traditional)• Securities Research (Modern)• Proprietary Trading (Modern)• Investment management (Modern)

Range of Services in IB -2

• Venture Funding• Angel Investing• Seed & Growth Capital Funding• Corporate Debt Restructuring (CDR)• Asset Restructuring (ARC)• Cross Border Joint Ventures (Part of M&A)• Placement of CD, CP, QIB, NCD and other

instruments with FI’s

Sector wise Break Up

• Healthcare• Public Finance (governments)• FI (financial Institutions group)• Heavy Industrials• TMT ( Technology, Media & Telecom) • FMCG• Real Estate• Infrastructure• Agri & Food Processing• Technology• And Many More….

Core IB Activities

• Front Office • Middle Office• Back Office

Core IB Activities

• Front Office –

• There are two main areas within front office: • Investment Banking and • Markets • which includes: Sales; Trading; Research;

Structuring

Core IB Activities• Middle Office• It includes- • treasury management, internal controls, and internal corporate strategy• Corporate treasury is responsible for an investment bank's funding, capital

structure management, and liquidity risk monitoring.• Financial control tracks and analyzes the capital flows of the firm, the

finance division is the principal adviser to senior management on essential areas such as controlling the firm's global risk exposure and the profitability and structure of the firm's various businesses via dedicated trading desk product control teams. In the US & UK, a financial controller is a senior position, often reporting to the chief financial officer.

• Internal corporate strategy tackling firm management and profit strategy, unlike corporate strategy groups that advise clients, is non-revenue regenerating yet a key functional role within investment banks.

Core IB Activities• Back Office

• Operations -This involves data-checking trades that have been conducted, ensuring that they are not wrong, and transacting the required transfers. Many banks have outsourced operations. It is, however, a critical part of the bank.

• Technology -Every major investment bank has considerable amounts of in-house software, created by the technology team, who are also responsible for tech support. Technology has changed considerably in the last few years as more sales and trading desks are using electronic trading. Some trades are initiated by complex algorithms for hedging purposes.

• Compliance- With internal & Govt regulations.

Other IB Businesses

• Global transaction banking (Majorly To Institutions)

• Investment management (Majorly To Institutions)

• Merchant banking (Very personal banking)• Private Banking

Mergers & Acquisitions• Merger – Definition 1. The combining of two or more companies, generally by offering the

stockholders of one company securities in the acquiring company in exchange for the surrender of their stock.

2. Voluntary amalgamation of two firms on roughly equal terms intoone new legal entity. Mergers are effected by exchange of the pre-merger stock (shares) for the stock of the new firm. Owners of each pre-merger firm continue as owners, and the resources of the merging entities are pooled for the benefit of the new entity. If the merged entities were competitors, the merger is called horizontal integration, if they were supplier or customer of one another, it is called vertical integration.

Acquisition – Definition

Acquisition – Definition • A corporate action in which a company buys most, if not all, of

the target company's ownership stakes in order to assume control of the target firm. Acquisitions are often made as part of a company's growth strategy whereby it is more beneficial to take over an existing firm's operations and niche compared to expanding on its own. Acquisitions are often paid in cash, the acquiring company's stock or a combination of both. (Eg. Mittal acquired Arcelor)

• An acquisition is the purchase of one company by another in which no new company is formed.

Acquisition – Reasoning & Logic• There's only one real way to achieve massive growth literally overnight, and

that's by buying somebody else's company. Acquisition has become one of the most popular ways to grow today. Since 1990, the annual number of mergers and acquisitions has doubled, meaning that this is the most popular era ever for growth by acquisition.

• Companies choose to grow by acquiring others to increase market share, to gain access to promising new technologies, to achieve synergies in their operations, to tap well-developed distribution channels, to obtain control of undervalued assets, and a myriad of other reasons. But acquisition can be risky because many things can go wrong with even a well-laid plan to grow by acquiring: Cultures may clash, key employees may leave, synergies may fail to emerge, assets may be less valuable than perceived, and costs may skyrocket rather than fall. Still, perhaps because of the appeal of instant growth, acquisition is an increasingly common way to expand.

Prominent Deals

• Lots of them !

Cross Border JV

• Intro

Questions

• More Questions Please !

THANK YOU

FOR YOUR PATIENT LISTENING AND KIND ATTENTION

For information purposes only

• This presentation material is intended for informational and educational purposes only and

• does not constitute tax, legal or professional advice. Nothing herein is to be considered as creating a service provider-client relationship between the recipient and Oceans Bridge Financial Advisory LLP (OBFA).

• Recipients should not act or rely on any information contained in this presentation material without seeking appropriate legal, tax, or other professional advice on the particular facts and circumstances at issue.

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