investments bank project final

8/10/2019 Investments Bank Project Final

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Chapter 1: Introduction

I nvestment banking is a particular form of banking which finances

capital requirements of an enterprise. Investment banking assists as it performs

IPOs, private placement and bond offerings, acts as broker and carries

through mergers and acquisitions. Investment banking is a field of banking

that aids companies in acquiring funds. In addition to the acquisition of new

funds, investment banking also offers advice for a wide range of transactions a

company might engage in.

Traditionally, banks either engaged in commercial banking or

investment banking. In commercial banking, the institution collects deposits

from clients and givesdirect loansto businesses and individuals.

Through investment banking, an institution generates funds in two

different ways. They may draw on public funds through thecapital marketby

selling stock in their company, and they may also seek out venture capital or

private equity in exchange for a stake in their company.

An investment banking firm also does a large amount of consulting.

Investment bankers give companies advice on mergers and acquisitions, for

example. They also track the market in order to give advice on when to make

public offerings and how best to manage the business' public assets. Some of

the consultative activities investment banking firms engage in overlap with

those of a privatebrokerage,as they will often give buy-and-sell advice to the

companies they represent.
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The line between investment banking and other forms of banking has

blurred in recent years, as deregulation allows banking institutions to take on

more and more sectors. With the advent of mega-banks which operate at a

number of levels, many of the services often associated with investment

banking are being made available to clients who would otherwise be too small

to make their business profitable.

At a very macro level, Investment Banking as term suggests, is

concerned with the primary function of assisting the capital market in its function

of capital intermediation, i.e., the movement of financial resources from those

who have them (the Investors), to those who need to make use of them for

generating GDP (the Issuers). Banking and financial institution on the one

hand and the capital market on the other are the two broad platforms of

institutional that investment for capital flows in economy. Therefore, it could be

inferred that investment banks are those institutions that are counterparts of banks

in the capital markets in the function of intermediation in the resource allocation.


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Chapter 1.2: Basics of Investment Banking

The banking sector is one of the biggest contributors to a nation's

economy, provided it is managed in an innovative and professional

environment. Investment banking is one rapidly growing form of banking.

An investment bank is a type of financial intermediary that performs a

variety of functions such as underwriting, facilitating mergers and acquisitions

or brokerage services for institutions. The work of an investment bank begins

right from the counseling before the underwriting sessions, and stretches right

till the securities are properly handled and distributed. Investment banks play a

very crucial role in market transactions on behalf of, or for private and public

investors, government and corporations. There are a number of investment

banks that also provide highly professional services in assisting their clients

with industrial know-how on various parameters.

The role of an investment bank as a mediator is to directly familiarize

the nature of the investment and the entity being invested in. In case of

conventional banking, people deposit finances in the form of cash, assets and

so on with a bank. The bank in turn can lend to a borrower under some

standard norms to utilize in his own way. In the case of investment banking,

there is a direct familiarization of both the investor and the borrower. This

means that an individual or institutional investor has an option to choose his

type of investment or division of investment into any given entity looking out

for funds. An investment bank can also assist investment in the financial

market.


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Investment banks provide companies with expert guidance and

formulate strategies on their behalf for disinvestment, and also to merge or

acquire new entities. Good investment banking involves procedures to

maintain and upgrade the quality of services and keep a close watch on the

emerging trends in the market, where their customer's money can be invested.

It also incorporates risk management services in order to streamline the flow

of capital, check its overuse, and come up with a detailed analysis of credit

risks.


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Chapter 1.3: Core Activities

Investment banking has changed over the years, beginning as a

partnership form focused on underwriting security issuance (initial public

offerings and secondary offerings), brokerage, and mergers and acquisitions

and evolving into a "full-service" range including sell-side research,

proprietary trading, and investment management.

1.Investment banking (fees for M&A advisory services and securities

underwriting);

2.

Asset management (fees for sponsored investment funds), and

3.Trading and principal investments (broker-dealer activities including

proprietary trading ("dealer" transactions) and brokerage trading ("broker"

transactions).


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Chapter 2.1: Introduction

An investment bank is a financial institution that assists individuals,

corporations, and governments in raising capital byunderwriting and/or acting

as the client's agent in the issuance ofsecurities.An investment bank may also

assist companies involved in mergers and acquisitions and provide ancillary

services such as market making, trading of derivatives and equity securities,

and FICC services (fixed income instruments,currencies,andcommodities).

Unlike commercial banks and retail banks, investment banks do not

take deposits. There are two main lines of business in investment banking.

Trading securities for cash or for other securities (i.e. facilitating transactions,

market-making), or the promotion of securities (i.e. underwriting, research,

etc.) is the "sell side", while buy side is a term used to refer to advising

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.

An investment bank can also be split into private and public functions

with an information barrier which separates the two to prevent information

from crossing. The private areas of the bank deal with private insider

information that may not be publicly disclosed, while the public areas such as

stock analysis deal with public information.

An advisor who provides investment banking services in the United

States must be a licensedbroker-dealer and subject to Securities & Exchange
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Commission (SEC) and Financial Industry Regulatory Authority (FINRA)

regulation.

Chapter 2.2: Definition

An individual or institution, which acts as an underwriter or agent for

corporations and municipalities issuing securities. Most also maintain

broker/dealer operations, maintain markets for previously issued

securities, and offer advisory services to investors. Investment banks also

have a large role in facilitating mergers and acquisitions, private equity

placements and corporate restructuring. Unlike traditional banks,

investment banks do not accept deposits from and provide loans to

individuals. Also called investment banker.


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Chapter 2.3: Glass-Steagall Act 1933

The modern concept of Investment Bank was created in the

Glass-Steagall act (Banking Act of 1933). Glass Steagall separated

commercial banks, investment banks, and insurance companies.

An act the U.S. Congress passed in 1933 as the Banking Act, which

prohibited commercial banks from participating in the investment banking

business. The Glass-Steagall Act was sponsored by Senator Carter Glass, a

former Treasury secretary, and Senator Henry Steagall, a member of the

House of Representatives and chairman of the House Banking and Currency

Committee. The Act was passed as an emergency measure to counter the

failure of almost 5,000 banks during the Great Depression. The Glass-Steagall

lost its potency in subsequent decades and was finally repealed in 1999.


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Chapter 2.4: Functions of Investment Bank

Investment banks are financial institutions that help companies or

governments raise capital (money), as well as advise them on other financial

decisions.

Main functions of investment banks:

Investmentbanking is all about meeting clients objectives

Advise companies about the most efficient ways to raise money

Create securities that meet both clients and investors objectives

Serve as a liaison between companies who want to raise money and

Investors that want to invest money

Serve as an advisor in mergers & acquisitions (M&A) transactions

Market makers (facilitate trading) for vast array of securitiesSALES &

TRADING

Provide research on companies they cover for clientsRESEARCH


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Chapter 2.5: Services provided by Investment

Banks

I nvestment banks provide four primary types of services: raising

capital, advising in mergers and acquisitions, executing securities sales and

trading, and performing general advisory services. Smaller investment banks

may specialize in two or three of these categories.

1. Raising Capital :

An investment bank can assist a firm in raising funds to achieve a

variety of objectives, such as to acquire another company, reduce its debt load,

expand existing operations, or for specific project financing. Capital can

include some combination of debt, common equity, preferred equity, and

hybrid securities such as convertible debt or debt with warrants. Although

many people associate raising capital with public stock offerings, a great deal

of capital is actually raised through private placements with institutions,

specialized investment funds, and private individuals. The investment bank

will work with the client to structure the transaction to meet specific objectives

while being attractive to investors.

2. Mergers and Acquisitions :

Investment banks often represent firms in mergers, acquisitions, and

divestitures. Example projects include the acquisition of a specific firm, the

sale of a company or a subsidiary of the company, and assistance in

identifying, structuring, and executing a merger or joint venture.


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3. Sales and Trading:

These services are primarily relevant only to publicly traded firms, or

firms, which plan to go public in the near future. Specific functions include

making a market in a stock, placing new offerings, and publishing research

reports.

4. General Advisory Services:

Advisory services include assignments such as strategic planning,

business valuations, assisting in financial restructurings, and providing an

opinion as to the fairness of a proposed transaction.


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Chapter 3.1: Skill and Talent Requirements

Investment banks want employees with a combination of strong

analytical and interpersonal skills. Some jobs lean more towards one skill set

than another (e.g. brokers need to be mainly sales people). A typical job of an

equities analyst requires both analytic and interpersonal skills. The skills

involved include:

Key Skill Area Requirement

People skills: High

Sales skills: Medium

Communication skills: High

Analytical skills: High

Ability to synthesize: High

Creative ability: High

Initiative: Medium

Work hours: 50-120/week

Hard Work Expected and Respected

Investment banking is a high work, high risk, high reward profession. When

you start your hours will typically be long but the work can be exciting. Be

prepared for moments of frustration where you are stretched too thin and

moments of exhilaration where everything clicks.

Tough to Break In

It's relatively hard to break into investment banking. You need to be

prepared to pursue firms on your own after you have thoroughly prepared

yourself.

Math Skills Can Help


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Some jobs in investment banking call for very strong mathematical ability. If

you are good at math think about getting an advanced degree in a technical

field (studying areas such as stochastic calculus and differential equations),

then take some advanced finance courses in options pricing or bond

valuation and apply to a research department on Wall Street.

Accounting Skills Valuable

The ability to analyze accounting numbers critically is important in most

analyst positions. If you have ambitions too "bail out" some day and become

a corporate financial analyst you might also want to consider the CMA(Certified Management Accountant) designation.

Traders are Multi-Talented

It's hard to define what makes a good trader. A good understanding of the

market, quick reactions, analytical skills and the ability to bluff help.

Teamwork Crucial

A crucial success factor in investment banking is teamwork. Being able to

pull together persons with large egos to get a presentation together for a

client is a challenge and is likely to be rewarded highly.

Scientists and Lawyers Wanted

There's definitely an interest in people with backgrounds in science and law.

Scientist types can work on everything from derivatives algorithms to

biotech banking. Lawyers can help design new securities, sell leasing

business and use their analytical prowess to talk to clients. This said, you


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have to sell yourself. It often doesn't hurt to go back and get an MBA from a

top school, and then try to repurpose your career into investment banking.

Contacts are Everything

The key to breaking into investment banking is a good network of contacts.

You may already be blessed with such a network, but if you don't have one,

you can start to develop one by going on informational interviews, attending

industry conferences, finding alumni from your school in the business etc.

Ourcontact lists may be helpful in this process. Keep in mind that your

network might not really "pay off" for some time. If you are young andhaven't gone for an MBA degree, try to get into the best possible school and

then go for quantitative and analytical coursework.

Getting Things Done is Important

Starting off in an investment bank, you are usually responsible for getting

projects done well and on-time, whether it be writing reports, running

spreadsheets, trading, doing research or coding programs. Later, once you

get involved with clients and ideas for generating revenue, you will be

rewarded greatly if you can bring in business. At higher levels (usually

Director, Managing Director and up) you are exposed to much greater risk.

At this level, people are often fired for non-performance, whereas at lower

levels you may not be scrutinized as closely.

Chapter 3.2: Qualification
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A Masters in Business Administration with 2 years of post-graduate study is

essential to grow up in this particular area.

Jobs in entry-level for analyst programs are obtainable to those graduate

undergoes who require experience in investment banking profession.

Analysts are essential in making proposals in finance and travel in order to

sit with the clients during meetings and sessions where senior bankers

discuss ideas to potential customers.

After this comes the requirement of MBA degree holder investment banker.


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Chapter 4.1: Role in Merger Acquisition

With increasing competitive pressures being placed on businesses and the

trend towards globalization, companies are engaging more and more in M&A

activity. Many companies looking to expand or streamline their business will use

investment banks for advice on potential targets and/or buyers. This normally

will include a full valuation and recommended tactics. The investment banks

role in mergers and acquisitions falls into one of either two buckets: seller

representation or buyer representation (also called "target representation" and

"acquirer representation").

They help target companies to develop and implement defensive tactics.

They help in valuing the target company.

They help in financing mergers and,

They invest in stock of firms which are likely to merge.


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Front Office, Middle Office, and Bank Office

Many investment banks are divided into three categories that deal with front

office, back office, or middle office services.

Front Office Investment Bank Services:

Front office services typically consist of investment banking such as helping

companies in mergers and acquisitions, corporate finance (such as issuing

billions of dollars in commercial paper to help fund day-to-day operations,

professional investment management for institutions or high net worth

individuals, merchant banking (which is just a fancy word for private equity

where the bank puts money into companies that are not publicly traded in

exchange for ownership), investment and capital market research reports

prepared by professional analysts either for in-house use or for use for a

group of highly selective clients, and strategy formulation including

parameters such as asset allocation and risk limits.

Middle Office Investment Bank Services:

Middle office investment banking services include compliance with

government regulations and restrictions for professional clients such asbanks, insurance companies, finance divisions, etc. This is sometimes

considered a back office function. It also includes capital flows. These are the

people that watch money coming into and out of the firm to determine the

amount of liquidity the company needs to keep on hand so that it doesn't get


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into financial trouble. The team in charge of capital flows can use that

information to restrict trades by reducing the buying / trading power available

for other divisions.

Back Office Investment Bank Services:

The back office services include the nuts and bolts of the investment bank. It

handles things such as trade confirmations, ensuring that the correct securities

are bought, sold, and settled for the correct amounts, the software and

technology platforms that allow traders to do their job are state-of-the-art and

functional, the creation of new trading algorithms, and more. The back officejobs are often considered unglamorous and some investment banks outsource

to specialty shops such as custodial companies. Nevertheless, they allow the

whole thing to run. Without them, nothing else would be possible.


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The investment banking seniority structure/hierarchy is very strict. A typical

hierarchy includes (from most Junior to most Senior): Analyst, Associate,Vice President, Director, and Managing Director. Analysts will tend to work

almost exclusively with an Associate, and the Analyst-Associate pair will be

responsible for the majority of deliverables in a typical client engagement.

Investment banking deals are done in small teams of 4-6 bankers who

usually work with one analyst, one associate, one vice president, possibly a

director, and the lead managing director on the deal. Work flow will be

executed from the bottom-up: analysts create the material, which is quickly

approved up the team hierarchy, to the managing director on the deal. The

managing director will have final say on all deal material before it is shown

to the client (the company that the bank is representing on the deal). It is

very common for deal teams to consist of bankers from across Product or

Coverage groups depending on the type of deal or engagement.


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Company finance

The investment banker serves multiple roles as an adviser to a

company. The banker must understand the current situation of the company

and help it move in the direction it wishes to go. This means assisting the

company to improve its competitive standing while adding and subtracting

assets and liabilities in order to strengthen the position of the company.

Bankers do this by finding takeover candidates, leading sales of stock and

bonds or suggesting new investment techniques. The ability of the banker to

understand the thinking of a corporate client is key to his or her success.

Achieving Strategic Objectives :

Investment bankers meet regularly with management to discuss what

objectives the company is strategically focusing on. The banker also needs

to provide an outside view of what competitor companies are doing and

what, if any, strategic complications this provides. Bankers must provide

solutions for achieving objectives and have the financial strength to lead

bond and stock offerings on behalf of the company.

Due diligence :

If a company has made a bid for another company an outside third party

such as the investment banker will need to supply an opinion regarding the

careful study and decision making that went into acquiring the company.


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This is called a due diligence report. The due diligence report is a necessary

document and requires that the investment banker ask probing questions

and ascertain that the company did everything in its power to uncover

problems that might arise later.

Fairness Opinions :

Another document necessary for the purchase of one company by another is

the fairness opinion. The fairness opinion is written by the investment banker

and provides detailed determinations, often using several investment metrics,

to demonstrate that the company did not overpay for the acquired company.Fairness opinions allow management to show that substantial effort was used

to get the best price possible for investors. An investment banker may be sued

by shareholders if it is later learned that his opinion was incorrect.

Managing Debt Offerings :

Investment bankers suggest ways to finance or refinance financial obligations.

In a period of low interest rates a banker may demonstrate cost savings by

redeeming outstanding debt at higher interest rates and substituting a new,

lower interest cost issue. The banker earns fees for the underwriting while

guiding the company's efforts to choose the proper size and maturity of the

offering as well as handling negotiations with the debt rating agencies.

Managing Stock Offerings :

Investment bankers are responsible for bringing new companies to the public

markets for the first time (also called an IPO or initial public offering), raising

capital for privately held companies, or improving the capital strength of


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existing public companies by redeeming debt with additional stock offerings.

Taking a company public is a difficult task as the stock offering may not be

received well if it is overpriced or will rise greatly in value if it is under-

priced.

Other Businesses

Global transaction banking is the division which provides cash

management, custody services, lending, and securities brokerage services to

institutions. Prime brokerage with hedge funds has been an especially

profitable business, as well as risky, as seen in the "run on the bank" with

Bear Stearns in 2008.

I nvestment management is the professional management of various

securities (shares,bonds, etc.) and other assets (e.g., real estate), to meet

specified investment goals for the benefit of investors. Investors may be

institutions (insurance companies, pension funds, corporations etc.) or

private investors (both directly via investment contracts and more commonly

via collective investment schemes e.g., mutual funds). The investment

management division of an investment bank is generally divided into

separate groups, often known as Private Wealth Management and Private

Client Services.
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Corporate Finance :

Raises capital for businesses typically by underwriting stocks and bonds, or

other equity and fixed income securities, and re-selling them in the public

markets or as private placements to large investors.

Mergers & Acquisitions :

Negotiate corporate mergers and acquisitions, advise companies onassessing the value of their businesses.

Public Finance :

Raises capital for state and local governments, school districts, and other

tax-exempt entities.

Syndicate :

Coordinates efforts of investment banking, sales and trading to move new

securities issues to market. Organizes underwriting and sales syndicates.

Prices, sells, and generates interest in, new securities.

Institutional Sales :

Sell securities and investment recommendations, investment management

capabilities, and services to large investors typically referred to as

institutional investors.


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Retail Sales :

Sell stocks, bonds, mutual funds and other investments to the general public

and small businesses. Provide investment advice and financial planning

services.

Trading :

Specialists are market makers on the floor of a stock exchange required to

buy and sell to maintain fair and orderly markets in the securities they are

assigned by the exchange. Floor Traders execute buy and sell orders for

clients of the firms and individuals that they work for as agents.

Research :

Equity Researchers review companies and write reports about their

prospects, often with "buy" or "sell" ratings. While the research division

generates no revenue, its resources are used to assist traders in trading, the

sales force in suggesting ideas to customers, and investment bankers by

covering their clients.

Over-the-Counter Trading (OTC) :

OTC traders buy and sell stocks, bonds and other securities over electronic

trading systems and by telephone as agents for customers or as principals for

their own firms.


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Investing:

Investing involves not only managing pools of assets for example,closed and open end mutual funds but also pension fund in competition with

life insurance companies. Investment bankers can manage such funds either

as agent for other investors or as principal for themselves. The objective in

funds management is to choose asset allocation to make sure sufficient

return.

Investment Banking:

Investment banking indicates activities related to underwriting and

distributing new issues of debt and equity in the market. New issues can be

both form for example, initial public offering and secondary issue. Initial

public offering now-a-days has become major trending issue for

corporations as it provide capital from the market as well as general

investors. When a corporation wants to raise funds from the market, they go

for initial public offering through a prescribed process guided by the

Securities and Exchange Commission.

Market Making:

Market making involves creating a secondary market in an asset by a

securities firm or investment bank. Investment bankers thus make available

market place for buying and selling various kinds of securities for example,

stocks, bonds, treasury bills, futures and options and derivatives instruments.

Investment bankers also make some arrangement for exchanging these

securities among different clients by providing transaction mechanism.


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Trading:

Trading is another part of market making where investment bankers

play a key role providing trading facilities for prospective buyers and sellers.

They purchase securities on behalf of their clients and make sell on behalf of

their clients if clients may willing to sell their holding securities. This kind

of trading process involve arbitrage pricing gap that entails some

commission for trading such securities on the organized stock exchanges.

Cash Management:Investment bankers also offer deposit like cash management accounts

to individual investors. Cash management offers services like any other

commercial banking and under these service clients may write cheques in

order to withdraw money when they demand and investment bankers are

liable to meet such immediate financial claims presented by their customers.

Mergers and Acquisition:

Investment banks are frequently involved providing advice and

assisting in mergers and acquisitions. For example, they assists in finding

merger partners, underwriting new securities to be issued by the merged

firms, assessing the value of the target firm, recommending the terms and

conditions of the merger agreement.


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The investment bank is a financial institution that helps corporate

organizations, company and individual persons to raise enough capital toinvest in their projects. Investment banking is all about money and security

trading, turning the paper works into real money. They also helps to advice

you on the proper kind of investment to investyour money into at the right

time, in other words they give professional advice on when to issue a sell or

buy request for stocks, bonds and securities, or better still invest the money for

you if given the veto power.

These are some of the services of an investment bank i n the investment

industry;

Invest your money:

Unlike the commercial banks that helps you to invest your money directly

where you deposit and withdraw money; the investment banks indirectlyhelps you invest your money in a chosen market, though this may not be

done directly but you would surely get a maximum returns on your

securities.

Sales of company stocks:

Another duty of investment banking is the sales of company shares and bond

in order to raise funds and capital for government, corporations, companies

and individuals.
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Buy securities:

They also help corporate bodies to buy shares which they believe have a

good value and have a ready and standby buyer whom would make a higher

bargain. They act more or less like the stock broker when it comes to buying

and selling of shares. These securities when traded could help the company in

raising more capital.

Managing assets and investment portfolios:

Investment banking also helps to manage your assets. As a corporate body or

even a business man, you need the services of an investment bank to help

you in the management of your assets, properties and finance.

Offer good financial advice:

One of the functions of a good investment banker is to offer a good and

profitable financial advice to clients. This professional advice requires

proper research on when to issue shares to the public in order to raise funds,

when not to issue public shares and also when to acquire a merger. All these

and more are the professional duties of an investment banker.


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A multinational investment banker has banking teams which are led by senior

partners who have influence in their clients all over the world, experience and

associations with many of the most important market players, regulators and top

industry bodies. All listen to their firms' clients and comprehend.

The outcome is the generation of the center of attention on the issues that really

matter.

These approaches provide the firm clients with a well established service in their

markets.

These give them access to specialized assistance which is characterized by

obligation to national markets, and a perceptive of the commercial and cultural

differences between countries.


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Like extra-legal property rights institutions, investment banks rely upon their

reputation. While much of the academic literature on investment banks

includes a casual acknowledgment of the role of reputation in underpinning

the investment bankers promises, the central importance of reputation to

everything the bank does is seldom acknowledged. In this subsection we

describe investment bank reputation, and we show how the investment bank

manages its networks so as to maximize the yield derived from its reputational

capital. The investment bank can fulfill its economic role of creating propertyrights over price-relevant information only if the informal contracts it writes

with the members of its information network are credible. The investment

banks promise to market an issuers securities at a fair price is therefore

meaningful only to the extent that it affects a reputation upon which a

significant proportion of its future issuers will rely.


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Any firm contemplating a signif icant transaction can benefit from

the advice of an investment bank. Although large corporations often have

sophisticated finance and corporate development departments, an investment

bank provides objectivity, a valuable contact network, allows for efficient use

of client personnel, and is vitally interested in seeing the transaction close.

Most smal l to medium sized companiesdo not have a large in-house

staff, and in a financial transaction may be at a disadvantage versus larger

competitors. A quality investment banking firm can provide the servicesrequired to initiate and execute a major transaction, thereby empowering

small to medium sized companies with financial and transaction experience

without the addition of permanent overhead, an investment bank provides

objectivity, a valuable contact network, allows for efficient use of client

personnel, and is vitally interested in seeing the transaction close.


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Investment banks help companies, governments and other public institutions

use the investment markets, to raise capital needed for new projects and

ongoing operations, by issuing or trading securities (shares and bonds).

Investment banks deal mainly with large organisations, other investment

banks and institutional investors. They do not deal with the general public.

They tend to be found in large cities such as London and New York.

When these clients need to raise money (capital), they can hire an investment

bank to advise them. The bank will determine the amount of fundingrequired and how this is structured, i.e. how much equity (shares) or debt

(bonds).

Investment banks advise companies when they want to raise capital by

floating the company on the stock exchange (known as an Inital Public

Offering). They determine the number and value of the shares to be issued

and distribute and time the release of this new stock.

Investment banks will also assist companies with secondary share issues and

help companies, governments and other public institutions to raise capital by

issuing debt (bonds); they will help with distributing the new securities,

usually to other banks and institutional investors.

Investment banks not only help with the issuing of shares and bonds but also

will underwrite the new securities issued by their clients, for a fee: that

means they agree to purchase the securities if they fail to sell. For very large

issues, several investment banks may work together, with one being the lead

underwriter.


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Some investment banks are also involved in private equity. This is finding

buyers for private share offerings. Companies that are in private ownership,

i.e. are not floated on the stock exchange, may wish to raise capital to

expand or even to take a public company, or part of it, back into private

ownership.

Other key areas which investment banks undertake are mergers and

acquisitions (M&A). They are involved in setting up deals and advising the

world's largest organisations when they want to merge or take over another

business.

M&A is an important source of income for many investment banks. Even in arecession, strategic mergers continue to happen and banks that specialise in

M&A continue to do deals, although at a lower volume.

In recent years, investment banks have also been increasingly involved in

management buy-outs. When these require a high level of borrowing, they

are known as leverage buy-outs (LBOs). The banks will advise on the

process and help with rising the funding, sometimes even taking their own

investment stake (known as merchant banking).

Investment banks also trade stocks, bonds, derivatives (futures and options)

and currencies with commercial banks and large institutional investors, on

the secondary markets. They make money by buying securities and other

commodities as cheaply as possible and then selling them on for as much

money as possible.

Investment banks also advise clients about buying stocks, bonds and other

securities. For larger clients, they will also manage their investments and

invest on their behalf. This is known as asset management.


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The top 10 Investment Banks in India offers large number of financial

advisory services by tracking the economic trends, besides providing

financial assistance to corporate and retail customers. Some of them are:

1.Avendus Capital:

An investment bank providing mergers and acquisitions, fixed returns,

controlled finance, calculated advisory facilities and Private Equity

Syndication to its customers ranging from investors to corporates. The bankhas a powerful research competence which it utilizes to close business deals

in hostile circumstances. It presently concentrates on sectors where Indian

firms have strategic expansion advantage namely Healthcare,

Pharmaceuticals, IT Services, Consumer goods, manufacturing, etc.

2.

Bajaj Capital

The Bajaj Capital Group is one of the renowned Investment consultant and

Financial Planning firms in India. It is certified under the Category I of

Merchant Bankers by SEBI. Bajaj Capital provides custom-made Fiscal

Planning facilities and investment consultation to the investors,

organizational investors, corporate, high income patrons and Non-Resident

Indians (NRIs). Being one of the biggest distributors of economic goods,

Bajaj provides an extensive range of investment schemes such as general

insurance, life insurance, mutual funds, etc to both public and private

institutions.


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3.

Cholamandalam Investment & Finance Company

A combined fiscal service provider of three firms namely Cholamandalam

DBS Finance Limited (CDFL), DBS Cholamandalam Distribution Limited

and DBS Cholamandalam Securities Limited, Cholamandalam DBS

operates in 16 international markets. DBS provides an extensive range of

facilities to small and medium sized enterprise, corporate, customers and

comprehensive banking activities across Middle East and Asia.

4.

ICICI Securities Ltd

India's biggest equity house, ICICI Securities Ltd provide back-to-back

banking solutions through its extensive distribution network to cater to the

varied needs of its retail and corporate clients. The firm is listed under the

Monetary Authority of Singapore (MAS) and Financial Services Authority,

UK and has an authoritative place in the core divisions of its functional areas

such as consultant services, fiscal good distribution, Equity Capital Markets

Advisory Services, etc.

5.IDFC

Initiated in 1997 in Chennai, IDFC undertook the responsibility of providing

financial support to 332 projects accruing a profit of upto Rs 2, 20, 400

million. The sectors under IDFC's financial assistance are infrastructure, agri

related business, transportation, healthcare, tourism and others.

6.Kotak Mahindra Capital Company

Initiator and leader in equity capital markets, Kotak Investment Banking has

undertaken the developmental work of most ground breaking advances in


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10.

UTI Securities Ltd

Endorsed as a self-regulating professional body in 1994, UTI Securities Ltd.,

is one of the renowned investment bank of India. After the termination of

Unit Trust of India (UTI) Act, the total share fund of UTISEL is now

controlled by superintendent of particular enterprise of UTI. The firm has

been offering all sorts of investment associated activities which incorporates

investment banking and corporate consultation facilities.


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Investment banking helps to boost the economy of the commercial sections of

the society in other words they create more opportunity for both the employed

and unemployed ones to raise capital and make profit.

They also help boost the financial security of a country from possible financial

drop down. Every economy that wants to have a growing financial status must

require the services of investment banking.

investments bank project final

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