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INTRODUCTION
Investment banking, or I- banking, as it is often called, is the term
used to describe the business of raising capital for companies and
advising them on financing and merger alternatives. Companies need
cash in order to grow and expand their business ; investment banks
sell securities to public investors in order to raise this cash. These
securities can come in the form of stocks or bonds .
At a very micro level, Investment banking is concerned with
the primary function of assisting the capital market in its
function of capital intermediation i.e. the movement of financialresources from those who have them (the Investors), to those who
need to make use of them (the Issuers).Banking and financial institutions
on the one hand and the capital market on the other are two broad
platforms of institutional intermediation for capital flows in the
economy. Therefore, it could be inferred that investment banks
are those institutions that are the counterparts of banks and the capital
market in the function of intermediation in resource allocation. From its
small beginnings in the seventies and eighties, investmentbanking unfolded itself as a full-fledged service industry
during1991. From mere public flotation services such as issue managem
ent and underwriting , the investment banking industry has evolved to
encompass many
high profile corporate actions. The term Investment Banking has a
much wider connotation and is gradually becoming more of an inclusive
term to refer to all types of capital market activity, both fund-based and
non-fund based . Investment Banker provides two general
functions:1.raising funds for clients and,2.assist ing clients in the sale
or purchase of securities
Over the decades, backed by evolution and also fuelled by recent
technological developments, investment banking has transformed
repeatedly to suit the needs of the finance community and thus become
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one of the mostvibrant and exciting segments of financial
services. Investment bankers have always enjoyed celebrity
DEFINITION
There appears to be considerable confusion today about what does and
does not constitute an investment bank and investment banker. Let us
see what is it?
Investment Bank (IB)
A financial intermediary that perfor ms a variety of services . This
includes underwriting, acting as an intermediary between an issuer of
securities and the investing public, facilitating mergers and
other corporate reorganizations, and also acting as a broker for
institutional clients .The role of the investment bank begins with
pre-underwriting counseling and continues after the distribution of
securities in the form of advice.
Investment Banker
A person represent ing a f inancial ins t i tut ion that i s in
the business of raising capital for corporations and municipalities.
An investment banker may not accept deposits or make commercial
loans. Investment bankers are the people who do the grunt work for IPO
and bond issues.
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MEANING OF INVESTMENT BANKING
In the definition, investment banking is the raising of
funds; both in debt and equity, and the division handling this in an
investment bank is often called the "Investment Banking Division"
(IBD). However, only a fe w small firms provide only this service.
Almost all investment banks are heavily involved in providing
additional financial services for clients, such as th e t radingof derivatives, income, exchange, commodity, a n d equity. I t i s
therefore acceptable to refer to both the " Inves tment
Banking Division" and other 'front office' divisions such as "Fixed
Income" as part of "investment banking," and any employee
involved in either side as an "investment banker." Furthermore, one
who engages in these activities in-house at a non-investment bank is also
considered an investment banker
More commonly used today to characterize what was
traditionally termed "investment banking" is
" sell side."
This is trading securities for cash or securities (i.e., facilitating
transactions, market-making), or the promotion of securities (i.e.
underwriting, research, etc.).
The" buy side"
constitutes the funds, mutual, hedge, and the investing public who
consume the products and services of the sell-side in order to
maximize their return on investment. Many firms have both buy and
sell side components.
http://en.wikipedia.org/wiki/Debthttp://en.wikipedia.org/wiki/Ownership_equityhttp://en.wikipedia.org/wiki/Derivative_(finance)http://en.wikipedia.org/wiki/Front_officehttp://en.wikipedia.org/wiki/Sell_sidehttp://en.wikipedia.org/wiki/Buy_sidehttp://en.wikipedia.org/wiki/Buy_sidehttp://en.wikipedia.org/wiki/Sell_sidehttp://en.wikipedia.org/wiki/Front_officehttp://en.wikipedia.org/wiki/Derivative_(finance)http://en.wikipedia.org/wiki/Ownership_equityhttp://en.wikipedia.org/wiki/Debt -
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Who needs an Investment Bank?
Any firm contemplating a significant 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 vitallyinterested in seeing the transaction close. Most small to medium
sized companies do not have a large in-house staff, and in a financial
transaction may be at a disadvantage versus larger compet i tors .
A qual i ty inves tment banking f i rm can provide the service
s required 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.
What to look for in an Investment Bank
Investment banking is a service business, and the client should expect
top-notch service from the investment banking firm. Generally only large
client firms will get this type of service from the major Wall Streetinvestment banks; companies with less than about $100 million in
revenues are better served by smaller investment banks. Some criteria
to consider include:
Services OfferedFor all functions except sales and trading, the services should go well
beyond simply making introductions, or "brokering" a transaction. For
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example, most projects will include detailed industry and financial
analysis, preparation of relevant documentation such as an offering
memorandum or presentation to the Board of Directors, assistance with
due diligence, negotiating the terms of the transaction, coordinating
legal, accounting, and other advisors,
Andgenerallyassisting in all phases of the project to ensure succe
ssful
completion.
ExperienceIt extremely important to make sure that experienced,
senior members of the investment banking firm will be active in
the project on a day-to-day basis. Depending on the type of transaction,
it may be preferable to work with an investment bank that has some
background in your specific ind us tr y se gme nt. Th e in ve st me nt
ban k s hou ld hav e a wide net work of relevant contacts, such
as potential investors or companies that could be approached for
acquisition.
Record of SuccessAlthough no reputable investment bank will guarantee success,
The firm must have a demonstrated record of closing transactions.
Ability to Work QuicklyOften, investment banking projects has very specific deadlines,
for example when bidding on a company that is for sale. The investment
bank must be willing and able to put the right people on the project and
work diligently to meet critical deadlines.
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Fee StructureGenerally, an investment bank will charge an initial retainer fee, which
may be one-time or monthly, with the majority of the fee contingent upon
successful completion of the transaction. It is important to utilize a fee
structure that aligns the investment bank's incentive with your own.
Ongoing SupportHaving worked on a transaction for your company, the investment bank
will be intimately familiar with your business. After the
transaction, a good investment bank should become a trusted
business advisor that can be called upon informally for advice and
support on an ongoing basis.
Because investment banks are intermediaries, and generally
not providers of capital, some executi ves elect to execute
transactions without an investment bank in order to avoid the
fees. However, an experienced, quali ty investment bank adds
significant cant value to a transaction and can pay for its fee many times
over.
The investment banker has a vested interest in making sure the
transaction closes, that the project is completed in an efficient time frame,
and with terms that provide maximum value to the client. At the
same time, the client is able to focus on running the business,
rather than on the day-to-day de ta il s o f t he tra ns ac tio n,
knowing that the t ransact ion i s being handled by
individuals with experience in executing similar projects.
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GLOBAL INDUSTRIAL STRUCTURE
The Investment banking industry on a global scale is oligopolistic
in nature ranging from the global leaders (known as the Global Bulge
Group) to Pure Investment banks and Boutique Investment
banks. The bulge group consisting of eight investment banks has a global
presence and these firms dominate the league in key business segments.
Therefore, the global investment banking industry ranges from the
acknowledged global leaders listed above to a large number of
mid-sized compe ti tors at a n at ion al or re giona l leve l and
the re ar end is support ed by boutique firms or advisory and sector
specialist.
Inves tment banking is one of the most global indus t r iesand is hence cont inuously chal lenged to respon d to new
developments and innovation in the global financial markets.
Throughout the history of investment banking, many have theorized
that all investment b an k i ng p r od uc t s an d s e r v i c es wo u l d
b e commoditized. N e w p r o d u c t s w i t h h i g h e r m a r g i n s
a r e c o n s t a n t l y i n v e n t e d a n d manufactured by
bankers in hopes of winning over cl ients and develop ing
t rading know-how in new markets . However , s ince thesecan usu al ly no t be patented or copyrighted, they are very often
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copied quickly by competing banks, pushing down trading
margins.
INDIAN SCENARIO
Origin
In India, though the existence of this branch of financial services can be
traced to over three decades, investment banking was largely confined to
merchant banking services.
The forerunners of merchant banking in India were the foreign banks.
Grind lays Bank (now merged with Standard Chartered Bank in
India) began merchant banking operations in 1967 with a license
obtained from the
RBI followed by the Citibank in 1970. These two banks were providing
Services for syndication of loans and raising of equity apart from other
advisory services.
It was in 1972; the Banking Commission Report asserted the need for
merchant banking services in India by the public sector banks. Based on
the American experience which led to the passing of the Glass
Steagall Act, the Commission recommended a separate structure
for merchant banks so as to distinct them from commercial banks and
financial institutions.
Merchant banks were meant to manage investments and provide advisoryservices. Following the above recommendation, the SBI set up its
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merchant banking division in 1972. Other banks such as the
Bank of India, Bank of Baroda, Syndicate Bank, Punjab National Bank,
and Canara Bank also followed suit to set up their merchant
ban kin g out fits . ICIC I was th e firs t f inancial institution to
set up its merchant banking division in 1973.
The later entrants were IFCI and IDBI with the latter setting up
its merchant banking division in 1992. However, by the mid eighties
and early nineties, most of the merchant banking divisions of public
sector banks were spun off as separate subsidiaries. SBI set up
SBI Capital Markets Ltd. in 1986. Other such banks su ch as
Canara Bank, BOB, PNB, Indian Bank and ICICI created
separate merchant banking entities.
Growth
Merchant banking in India was given a shot in the arm with the advent
of SEBI in 1988 and the subsequent int roduct ion of f ree
pr icingof pr imary market equi ty i ssues in 1992. However , pos t -
1992, the merchant banking indus t ry was largely dr iven b
y iss ue man age ment act ivi ty whic h fluctuated with the trends
in the primary market.
There have been phases of he c t i c ac t i v i ty fo l l o we d b y
S E B I s t a r t e d t o regulate the merchant bankers who registered
with a se v er e se tb ac k in bu s i n es s . SEBI were either in
issue management or associated activity such as underwriting or advisor
ship.
SEBI had four categories of merchant bankers with varying eligibility
criteria based on their net worth. The highest number of reg istered
merchant bankers with SEBI as at the end of March 2003 was 124,
from a peak of almost thousand in the nineties. In the financial year 2002-
2003 itself, the number decreased by 21.
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Constraints in Investment Banking
Due to the over-dependence on issue management activity in the initial
years, most merchant banks perished in the primary market downturn that
followed later. In order to stabilize their businesses, several
merchant banks diversified to offer a broader spectrum of capital
market services.
However, other than a few industry leaders, the other merchant banks
have not been able to tra ns fo rm th em se lv es in to fu ll se rv ic e
inves tme nt banks. Go in g by the service portfolio of the leading
full service investment banks in India, it may be said that the industry inIndia has seen more or less similar development as its wes tern
counterpar ts , though the bread th avai lable in the overseas
capital market is still not present in the Indian capital market.
Secondly, due to the lack of institutional financing in a big way to fund
capital market activity, it is only the bigger industry players who are
in investment banking. The third major deterrent has also been the
lack of depth in the secondary market, especially in the corporate debt
segment.
Investment banking and Merchant banking
Investment banks and Merchant banks in their purest forms are
di f ferent kinds of f inancial ins t i tut ions that per form
dif ferent services . In pract ice, the f ine l ines that separate
th e fu nc ti on s of me rc ha nt ba nk s an d investment banks tend to
blur. Traditional merchant banks often expand into the field of marketing
of securities and have an onerous responsibility towards the i nvestors
w h o i n v e s t i n such securities. While many investment
banks participate in trade financing activities. In theory, inves tment
banks and merchant banks perform different functions.
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Pure investment banks raise funds for businesses and some
governments by registering and issuing debt or equity and selling it on a
market. Traditionally, investment banks only participated in underwriting
and sel l in g sec uri t ies in la rge blocks. Investment banks
facilitate mergers and acquisitions
through share sales and provide research and financial consulting to
companies. Traditionally, investment banks did not deal with the
general public.
Traditional merchant banks primarily perform international financing
activities such as foreign corporate investing, foreign real estate
investment, trade finance and international transaction
facilitation. Some of the activities that a pure merchant bank is
involved in may include issuing letters of credit, tr an sf er ri ng
funds internat ional ly , t rade consul t ing and co- inves tment
in projects involving trade of one for or another.
As a general rule, investment banks focus on
initial offerings(IPOs)and large public and private share offerings
. Merchant banks te nd to oper ate on smal l-scal e comp anies
and offer creative equity financing , bridge financing ,mezzanine
financing an d a n um be r o f c or po rat e credit products. While
investment banks tend to focus on larger companies, merchant
banks offer their services to companies that are too big
for venture capital
firms to serve properly, but are still too small to make acompelling public share offering on a large exchange. In order to
bridge the gap between venture capital and a public offering,
larger merchant banks tend to privately place equity with other
financial institutions, often taking on large portions of ownership in
companies that are believed to have strong growth potential.
Merchant banks still offer trade financing products to their clients.
Investment banks rarely offer trade financing because most investment
banking clients have already outgrown the need for tradefi nancin g and th e var ious credit products linked to it. But,
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Investment banking is a term of much wider connotation than Merchant
banking as it implies significant fund-based exposure to the
capital market. Internationally, Investment banks have progressed in
both fund-based and non-fund based segments of the industry. In India,
the dependence has been heavily on Merchant banking more particular
with issue management and underwriting. However, downturn in the
primary market has forced merchant banks to diversify and become full-
fledged Investment banks.
INVESTMENT BANKS AS FINANCIAL INTERMEDIARY
Investment bankers facilitate the flow of money. They are
financial intermediaries, the critical link between users and providers of
capital. They bring together those who need funds with those who have
funds, and they ma ke th e mar ke ts th at al lo ca te ca pi ta l an d
reg ula te pri ce in the se fina nci al exchanges.
Those who desire to raise capital are called issuers, since they i ssue
ownership in thei r enterpr ises ( i .e . equi ty) or obl igat ionsf rom thei r enterpr ises ( i .e . promises to pay debt inte res t
and repa y deb t prin cip al) in exchange for cash or cash
equivalents; those who provide capital are called investors,
since they must invest cash or cash equivalents in exchange
for those rights of ownership or obligation.
Investment bankers enable issuers to raise capital (i.e.
corporations or companies that sell or issue securities forcash)
and investors to place capital (i.e. individuals or institutions that
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buy or invest in those securities) in the most efficient manner for both.
investors, since they must invest cash or cash equivalents in
exchange for those rights of ownership or obligation.
Investment bankers enable issuers to raise capital (i.e.corporations or companies that sell or issue securities forcash)
and investors to place capital (i.e. individuals or institutions that
buy or invest in those securities) in the most efficient manner for both.
Investment banking is a dynamic industry characterized by flux a n d
t r a n s f o r m a t io n . F i n a n c i a l i n s t r u m e n t s h a v e g r o w n
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m o r e c o m p l e x a s financial intermediaries have become more
competitive. Blizzards of innovative instruments are sweeping
f i n a n c i a l m a r k e t s .
B o u n d a r i e s a m o n g d i v e r s e f in a nc ia l i ns ti tu ti o ns ar eblur r ing. Barr iers between internat ional f inancial markets
are eroding. And, ampl i fying the complexi ty and the
compet i t ion, financial markets, firms, products, and techniques are
merging and melding. Investment banking, long simply synonymous with
t h e d o m e s t i c u n d e r w r i t i n g a n d m a r k e t m a k i n g o f
c o r p o r a t e e q u i t y a n d d e b t securities, has expanded dramatically.
The industry has been transformed new functions (e.g., the
prominence of mergers and acquisitions), new products (e.g., raterisk management mechanisms, such as swaps), new techniques (e.g.,
securitization of illiquid receivables), new markets (e.g., Tokyo,
London and India) , and n ew mu scle (e.g. , mercha nt
banking) have changed the face of contemporary Investment
banking
BUSINESS PORTFOLIO OF INVESTMENT BANKS
Globally, investment banks handle significant fund-based business of
their own in the capital market along with their non-fund
service portfolio that is offered to clients. However these distinct
segments are handled e i t h e r o n the same balance sheet or through
subsidiaries and af f i l ia tes depending upon the regulatory
requirements in the operating environment of each country. All
these activities are segmented across three broad platformsequity
market activity, debt market activity and merger and acquisitions
( M & A ) a c t i v i t y .
I n a d d i t i o n , g i v e n t h e s t r u c t u r e o f t h e m a r k e t ,
t h e r e i s a l s o s eg me nt at io n b as ed on wh et he r a
pa rti cu la r in ve stm en t ba nk be lo ng s to a banking parent or
investment bank. In the case of universal banks such as the Citigroup or
UBS Warburg, loan products form a s ignif icant part of the
debt market business portfolio. Pure investment banks such asGoldman Sachs, Merrill Lynch and Morgan Stanley Dean Witter do
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not have commercial banking in their portfolio and therefore, do not
offer loan products. Besides the larger firms, there are a host of
other domestic players present in each country and mid-sized
investment banks, which either specialize in local markets or in certain
product segments.
The global mergers & acquisitions business is very large and
measures up to t r i l l ions of dol lars annual ly . Inves tment
banks play a lead advisory role in this booming segment of financial
advisory business. Besides, they come in as investors in
management buy-outs and management buy-in transactions. On the
other occasions, wherein investment banks manage private equity funds ,t
hey also represent their investors in such buy-out deals.
S o m e i n v e s t m e n t b a n k s i n t h e o v e r s e a s m a r k e t s a l s o
s p e c i a l i z e i n n i c h e s e g me nt s s uc h a s management of
he dg e fu nd s, bu ll io n tr ad e , co mmo di ty hedges, real estate and
other exotic market. Below given is the diagram, which represents the
broad spectrum of global investment activity.
INDIAN INVESTMENT BANKING INDUSTRY
CHARACTERISTICS AND STRUCTURE
Investment banking in India has evolved in its own characteristic
structure over the years both due to business realities and the regulatory
regime. On the regulatory front, the Indian regulatory regime does no
allow all investment banking functions to be performed under one entity
for two reasonsto prevent excessive exposure to business risk under
one entity and to prescribe and monitor capital adequacy and risk
mitigation mechanisms.
Therefore, bankruptcy remoteness is a key feature in structuring the
bus iness l ines of an inves tment bank so that the r i sks and
re wa rd s ar e defined for the investors who provide resources to
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the investment banks. In addition, the capital adequacy requirements
and leveraging capability for each business line have been prescribed
differently under relevant provisions of law. On the same analogy,
commercial banks in India have to follow the provisions of the Banking
Regulation Act and the RBI regulations, which prohibit them
from exposing themselves to stock market investments and
lending against stocks beyond certain specified limits.
Therefore, Indian investment banks structure their business segments
indifferent corporate entities to be able to meet regulatory norms.
For e.g. i t is desirable to h ave mercha nt banki ng in a
separate company as it requires separate merchant banking
license from the SEBI. Merchant Bankers other than
Banks and financial institutions are also prohibited from undertaking any
other busin ess other than th at in the securi t ies marke t .
However , s inc e banks are subject to the Banking Regulation Act,
they cannot perform investment banking to a large extent on the same
balance sheet. Asset management business in the form of a mutual fund
requires a three-tier structure under the SEBI regulations. Equity researchshould be independent of the merchant banking business so as to avoid
the kind of conflict of interest. Stock broking has to be separated into
different company, as it requires a stock exchange membership apart
from SEBI registration. Investment banking in India has also been
influenced by business realities to a large extent .
Due to the above reasons, the Indian investment banking industry has a
heterogeneous structure. The bigger investment banks have several group
ent i t ies in which the core and non-co re bus iness segments
are d is t r ibuted .Others have either one or more entities depending
upon the activity profile. The heterogeneous and fragmented structure is
evident even if Indian investment banks are classified on the basis
of their activity profile. Some of th em su ch as SBI, IDBI ,
ICIC I, IL & F S, Kot ak Mahi ndr a, Citi ban k a nd others offer
almost the entire gamut of investment banking services permitted in
I n d i a .
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A m o n g t h e s e , t h e l o n g - t e r m f i n a n c i a l i n s t i t u t i o n s a r e
g r a d u a l l y transforming themselves into full service commercial banks
9called universalbanking in the Indian context. They also have full
service investment banking under their fold.
INDIAN INVESTMENT BANKING INDUSTRY
DEVELOPMENTS
Over the subsequent years, two developments have taken place. Firstly,with the downturn in the capital markets, the merchant banking industry
has seen tremendous shake out and only about a 10% of them remain in
serious business as pointed out earlier. The other development is that due
to the gradual regulatory developments in the capital markets, investment
banking activities have come under regulations which
re qu ir e se pa ra te re gi st ra ti on, licensing and capital controls.
Presently, there are no Indian investment banks although there i s a
b u l g e b r a c k e t o f i n v e s t m e n t b a n k s i n I n d i a t h a t h a v es o m e o v e r s e a s presence to serve Indian issuers and their
investors.
At the middle level are se ve ral nic he pla yers inc lud ing the
me rc ha nt ba nk in g su bs id ia ri es of so me public sector banks.
Some of these subsidiaries have been either shut down or sold off in
the wake of the two secu r i t ies scams seen in 1993 and in
20 00 .However, certain banks such as Canara Bank and PunjabNational Bank have had successful merchant banking activities.
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Among the middle level players are also merchant banks structured
as non-banking financial services companies such as Rabo India
Finance Ltd., Alpic Finance etc. There are also in the middle l evel ,
some pure advisory f i rms such as Lazard Capi tal , Erns t
& Young,KPMG, Pr ice Waterhouse Coopers etc . At the
l o we r e n d a re se v er al n ic h e p l a y e r s a n d b o u t i q u e f i r m s ,
wh ic h f oc us on on e o r m or e s eg me nt s o f t he investment
banking spectrum
INSTITUTIONAL INVESTING AND INVESTMENTBANKING
. Institutional investors have been a recent phenomenon in the Indian
capital market, which till then had the presence of a handful of public
financial institutions such as the UTI and the insurance companies. The
term l e n d i n g i n s t i t u t i o n s s u c h a s t h e I D B I a n d I F C I
d id n o t p a r t i c i p a t e i n s e c o n d a r y m a r k e t d e a l i n g a s
a m a t t e r o f p o l i c y . W i t h t h e a d v e n t
o f liberalization, there are presently a large number of domestic
institutional investors in the secondary market apart from
approved foreign institutional investors. In addition, institutional
investments have risen significantly in the primary markets through
venture capi tal and private equity investments by investors in both
the domestic and non-resident categories. Several of the leading
inves tment banks ei ther have dedicated venture funds or
private equity funds that invest in primary market.
What does the 'FIG' at an investment bank refer to?
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The 'FIG' at an investment bank usually refers to the financial
institutions group - a g r o u p o f p r o f e s s i o n a l s t h a t
p r o v i d e s i n ve st me nt b a nk in g a nd mergers and
acquis i t ions exper t i se t o f i nancial ins t i tut ions . In order to
provi de mor e tai l ored servi ces, so me in vestme nt banks
further segment their areas of expertise under the financial institutions
g r o u p i n t o a b a n k i n g o r f i n a n c i a l s e r v i c e s group,
and an insurance group.
Some investment banks use these sorts of divisions more as
marketing technique than as a representation of real expertise.
Some examples of companies that may represent prospective FIG
clients include insurance companies specializing in personal o rc o m m e r c i a l i n s u r a n c e p r o d u c t s , c o m m e r c i a l
f i n a n c e c o m p a n i e s that pr ovide f i nancial s e rvices to
bu si ne ss es, ban ks, bro kera ges , investment dealers, and wealth
management companies.
The services that the FIGs may provide to clients include, but are not
l i m i t e d t o : private and public equity or debt financing,
recapital ization, financial restructurings, mergers, acquisitions,
corporate valuations, expert f i n a n c i a l o p i n i o n a n d
c o r o l l a r y a n a l y s i s a n d a d v i s o r y s e r v i c e s .
Some other investment banking segments include: health care,
industr ial , media , tele commu nicat ions, mining , ene rgy,
r et ai l, te c hn o lo gy an d r ea l - e s t a t e , a l t h o u g h t h i s i s b y n o
m e a n s a n e x h a u s t i v e l i s t o f t h e b u s i n e s s divisions within
which investment banks operate.
SERVICE PORTFOLIO OF INDIAN INVESTMENT BANKS
The core services provided by Indian investment banks are broadly
divided into two categories
A) Management of public offers and private placements.
B)Corporate advisory services.
These are profiled below:
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(A)Management of public offers and private placements
Initial Public Offer
The first exposure of a company to the capital marketi.e. Initial
P ub li c O ff er . I n i t i a l p u b l i c o f f e r i n g o r I P O , i n
f i n a n c i a l m a r k e t terminology, is the initial sale of the
common shares of a corporation to the public. It represents a
primary market. Companies typically issue stock when they first
go public through initial public offerings (IPOs), and they may issue
stock and bonds periodically to fund such enterprises as
research, new product development, and expansion. IPO, wh ichis currently, perceived by entrepreneurs and start-up executives is a
good way to secure money to expand the business without over-reliance
upon third-partydebt.
Before stocks and bonds are issued, investment bankers perform due
diligence examinations, which entail carefully evaluating a company's
worth in terms of money and equipment (assets) and debt(liabilities).
This examination requires the full disclosure of a company's strengths andweaknesses. Investment banks aid companies and governments in selling
securities as well as investors in purchasing securities, managing
investments, and trading securities. Investment banks take the form of
brokers or agents who purchase and sell securities for their clients;
dealers or principals who buy and sell securities for their personal interest
in turning a profit; and broker-dealers who do both.
The primary service provided by investment banks is
underwriting, which refers to guaranteeing a company a set
pr ice for the secur i t ies i t p lans to i ssue. I f the secur i t ies
fail to sell for the set price, the investment bank pays the
company the difference. Therefore, investment banks must carefully
determine the set price by considering the
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expectations of the company and the state of the market for the
securities. The lessons are clear. IPO is a complex process requiring hard
work by a skilled team of investment bank: in the end, the market will
punish the ill- prepared. Thus, IPO market is of special significance to
investment banking s i n c e t h i s i s a n a r e a t h a t p r o v i d e s
s t at u to r y e x cl u s iv i t y to th e m a s l e a d managers. In the days
when the public offers market is very vibrant, this area of service forms
the main activity for most Indian investment banks.
Rights Issues and Secondary Public Offers
A rights issue is made to the existing shareholders of a company. The
right herein refers to the entitlement of a shareholder to apply for and
receive additional shares in the company. It is a right and not obligation.
Secondary public offer also known as follow on offering, consists
of p o s t - l i s t i n g p u b l i c i s s u e s , o f f e r s f o r s a l e a n d
c o m p o s i t e i s s u e s . A l i s t e d company shall be eligible to make
rights issue and secondary public offers. A listed company has to consider
many more aspects than anunlisted company in approaching its
shareholders or the primary market for funds. From Investment
banking prospective too, a listed company has a set of opportunities andlimitations as compared to an unlisted company.
Role of Investment Banker in Listed CompaniesThe functional areas for investment bankers in listed companies are thus
listed below:
1)Acting as advisers and arrangers in raising debt and equityfinance through the capital market.
2)Acting as advisers and arrangers for private placement of debt and
equity.
3)Act ing as merchant bankers for t ransact ions relat ing to
ri ghts i ssu es and secondary public offers.
4)Advise companies on pricing and valuation for various types of offers.
5)Advise companies on post-listing issues and offerings.
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6)Advise companies on buy backs and act as merchant bankers for such
offers.
Private Placement of EquityEquity capital can be raised through public offers or through private
issues. The term private issue of equity has to be interpreted in
terms of issue of equity shares in th e no n- pu bl ic ro ut e ei th er
th ro ug h a pr iv at e of fe ri ng or by ot he r means. Private placement
is distinguished from the public offering of securities. Depending upon
the category of investors being looked at and the status of the investor
company, the private market for raising equity can be broadly classifiedas
INSTITUTION and NON-INSTITUTIONAL
The Institutional investors are Venture Capital funds and Private
Equity funds Inv estm ent Ban ker s also pla ce sec urit ies with al imi ted numb er of institutional investors such as insurance
companies, investment companies, and pension funds.
Venture Capital funds is institutional risk capital that hasthe mandate of investing in start-up companies. The investment
banker plays a key advisory role in formulating the business of
a start -up company and also helps i t to raise its finances.
Broadly, the investment banker can deliver the following services
to a start-up company:
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Strategy and business advisory services in formulating thebusiness model for the companys stated business objective.
Perform a study of the industry landscape and competitor analysis,product pricing strategy and SWOT analysis.
Advise the company on the necessary steps to be taken to make thebusiness model credit worthy and investor friendly.
Act as the arranger for the companys debt or equityfinancing as per the financing plan that includes representation
and negotiations.
Raise financing for the company in the most efficient way possible.Considering the fact that investment banks provide transaction-
oriented services, it is found that most of the top line investment
banks do not prefer t o work with s t ar t- ups in pure adviso ry
role unless the companys business plan is large enough to their
linking.
Private Equity funds on the other hand, are larger investorsinvesting in later stage companies. In this area, the role of
investment banker is more transaction oriented than in venture
capital fund raising. This is because, the business model of the
company is more established, the organization is fully in place and
the cash flow model is proven. The engagement in connection
with a private equity transaction can be summarized as follows:
Ident i fy and ini t ia te contact wi th prospect ivein ve st or s, in cl udi ng ro ad shows, and following up as
necessary;
R e p r e s e n t o r a c c o m p a n y t h e c o m p a n y i nm e e t i n g s , p r e s e n t a t i o n s a n d ensuring negotiations with
prospective Investors;
Review the outcome of such meetings with the company, andrecommend to the company further action as may be required;
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Review and advise on proposals/offers from prospective investors;The
NON-INSTITUTIONAL
investors include high net wo rt h in ve stor s (c al le d HN Is ), se ed
s tage venture inves tors (also cal led angel investors), financial
and investment companies, other corporate, stock broking companies,
portfolio investors, institutional market investors such as m utu al
funds and, foreign ins t i tut ional inves tors and non-res ident
Indians
Private placements in the non-institutional category are generally made
through c l o s e s o u r c e s . S u c h k i n d o f l i m i t e d p r i v a t eo f f e r s a r e g e n e r a l l y m a d e b y appointing a suitable agency that
can facilitate the fund raising. While some investment banks specialize
only in raising venture c a p i t a l a n d p r i v a t e e q u i t y , o t h e rs
t h a t h a v e s t r o n g i n v e s t o r r e l a t i o n s h i p s especially in the
HNI category, offer private placements to non-institutional
investors as a service. These are boutique investment banks that
are often an extension of stock broking houses.
Private Placement of Debt
The private placement market for debt securities essentially consists of
medium to long-term debt securities such as debentures and
bonds being placed privately with selected investors, mostly institutional
or high net worth priv ate inv esto rs. As of no w, the priv ate
placement market which i s considered as a market for the informed
investor and the placement being made in a close loop, has
b e e n h u g e l y p o p u l a r d u e t o i t s s i m p l e a n d q u i c k d e a l process, lack of elaborate disclosures and regulatory clearances.
Private placement of Debt is an important source of funds both
for companies under the Companies Act and other types of entities such
as public sector corporations, financial institutions and banks.
Debt securities issued through private placement can also be
listed on the stock exchange to provide them with liquidity.
Therefore, there are three main constituents in this marketthe issuers,
t h e investors and bot h th ese are bro ugh t to get her by t heinvestment banker who acts as the arranger to the placement. The
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deal process typically st arts with the issu er rol lin g o ut a
p l an t o r a is e funds t hr ough the pr i va t e p l a ce me nt r o u t e .
T h e f i r s t s t e p i n t h i s d i r e c t i o n w o u l d b e t o a p p o i n t
t h e investment bank as an arranger to the whole placement. The firststep for the investment banker is to ascertain that the company has
taken the necessary approvals from its board, shareholders and
existing lenders for the proposed debt and has the necessary
powers under its memorandum and articles of association, Sec
293(1)(a) and 293(1)(d) of the Companies Act.
The arranger has to then become familiar with the companys business,
the industry space, the financials of the company and the
financing requirements. Usually a check-list of the required information
is prepared and the information is put together in the form of a private
placement memorandum. All the necessary back-up papers and
documents are also compiled and kept ready for the requirement of
investors.
One of the important tasks of the investment banker is to arrive at the
instrument in offer and the deal structure. The investment
banker has to use his conventional wisdom, ingenuity and marketintelligence to arrive a t t h e c o u p o n r a t e a n d s u i t a b l e
e n h a n c e m e n t s i f a n y , r e q u i r e d f o r t h e instrument.
Credit rating is an important process in the deal as it en hances
the possibility of closing the deal early by providing all the
necessary comfort to investors.
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(B)Corporate Advisory Services Corporate Re-organizations
As a result of liberalization and globalization the co mp et it io n
in the corporate sector i s beco ming intense. To survive in
the competition, companies are reviewing their strategies,
structure and functioning. This has led to corporate restructuring. This
is the most important business segment for investment bankers after
management of public offers.
Globally, in the traditional days of investment banking, this business
segment, popularly known as M&A, contributed to a significant share of
the bottom line of investment banks, sometimes becoming the largestrevenue stream. In a corporate restructuring involving a split-up or
disinves tment by the promoters , the inves tment ban ker
pr ep ar es th e en ti re feasibility plan, deal structure, identifies
the buyers or the sel lers as the case may be, conducts the valuation
and due diligence and negotiations for arriving a t t h e t e r m s h e e t .
T h e i n v e s t m e n t b a n k e r a l s o w o r k s c l o s e l y w i t h
ot h er profess ionals such as accountant s and l ega l
advisors in order to look at the legal, accounting and tax issues
involving such corporate re-organizations. Thus in all corporate re-
organizations, the investment banker perf orms the p ivota l role of
t ransact ion service, act ing as a catalys t for the ent i re
deal . With a growing number of mergers and acquis i t ions
as wel l as
corporate re-organizations, in ve st men t b an ks ha ve be co me
increas ingly involved in the process of arranging these transactions aspart of their primary services.
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Project Advisory ServicesProbably one of the most fascinat ing areas in corporate
f in an ce i s p ro je ct f i n a n c e , n o t o n l y b e c a u s e o f i t s
c o m p l e x i t y b u t b e c a u s e o f i t s p r o f o u n d economicsignificance as well. Project financing has traditionally been a
term
loan based act ivi ty , where inves tment banks had very
l i t t le to do unless an element of capital market financing was
involved. However, it has now become an integral part of the
advisory service portfolio of leading investment banks, especially
of those with a Universal Banking background. Project advisory services
relate to all facets of project finance, which begin at the stage of project
conceptualization and extend till the completion of financial closures and
beyond. Most projects in recent times have used the services of
investment banks in this area of high finance. Broadly, the range of
services entails the following:
B i d a d v i s o r y s e r v i c e s i n p r o j e c t s w h e r e i n t h ep r o j e c t i s a w a r d e d t o a particular consortium through a
bidding process
Advise in entering into other key project contacts Structuring the means of finance for the project Preparation of Project Report, loan applications and associated
documents
Act as arranger on behalf of the client for representation andnegotiations with lenders and equity investors
Management of private placements/public offers of debt or equity Achieve financial closure with the best terms and in the
best possible time for the project.
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Financial Restructuring Advisory
Financial Restructuring as the term denotes is the art
of restating the financial position of a company as reflected by its
Balance Sheet as on a given date . In order to achieve such
restatement a complex financial and legal process is involved as it
concerns several conflicting interests. Financial Restructuring can be
triggered off either from the asset side of the Balance Sheet or the liability
s ide.
Therefore, Financial Restructuring encompasses restructuring
of debt capital (outside liability) as well as equity capital.
The Investment Banking Services in Debt Restructuring
Inves tment bankers , of la te , have developed a service area
in ad vi si ng an d representing companies in debt restructuring
programmers. The various steps involved are as follows:
The first stage would be to formulate a viability plan forthe company. For this purpose, the investment banker has
to understand the bus iness model, present financial position,
existing borrowings and their carrying cost, future business
opportunities and the resulting cash flow there from.
O n c e t h e c o m p a n y s v i a b i l i t y a n d f u t u r eo p e r a t i n g p l a n h a v e b e e n formulated, the next step
would be to float the Debt Restructuring Scheme( D R S ) . T h e
D R S h a s t o c o m p l y w i t h s t a t u t o r y n o r m s a n d
a p p l i c a b l e guidelines issued by the RBI.
The investment banker has to use his expert knowledge and priorexperience in formulating the scheme, so as to envisage
workable terms of sacrifice from lenders and attractive terms of
liability and cost reduction for his client.
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The next s tep would be to present the DRS to lendersand represent the cl ient in discuss ion and
negot iat ions wi th the consor t ium of leaders
or individual lenders as the case may be.
The Investment Banking Services in Equity RestructuringThe investment banker plays an important role in the equity restructuring
of a company, in the area of share buy-back. More often than not,
companies that intend to restructure their equity capital are listed on the
stock exchanges and therefore, such restructuring may need to
comply with the relevant provisions of the SEBI guidelines. However,the real need for an investment banker in equity restructuring is to play
the role of a merchant banker for a proposed share buy-back if any,
as part of the restructuring programme.
Since SEBI guidelines stipulate that share buybacks have tocomply with SEBI guide l ines, and a mercha nt banke r
holding a val id l icense should mana ge the of fer , i t
becomes imperat ive for the company to appoint a
merchant banker as manager to the offer.
The major contribution that the merchant banker makes in suchassignments ,apart from managing the offer, is in advising
the company on the proper method to be adopted for the buy-
back accordingly.
The pricing becomes critical because if the buy -back isunder-priced, the off er may not be suc ces sful . On the
other hand, i f the buy-back is over pr iced, i t may
erode shareholders value for those who remain wi th
the company post-buyback. Therefore , the role of the
merchant banker becomes extremely important.
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Mergers and Acquisitions Advisory
In simple words, merger is a combination of two or more companies
into a s ingle where one survives and other lose thei r
co rp ora te existence
M&A advisory firms are referred to by a number of names including:
investment banks, bulge bracket firms, middle market M&A
firms, business intermediar ies and business brokers . As a
general ru le , business brokers represent client of smaller
transactions, middle market firms handle the mid-size transactions and
investment banks handle the largest transactions.
M&A have traditionally been the forte of investment banks world over.
In the earlier era of investment banking, M&A advisory
constituted the only advisory area and accounted for the second largest
revenue stream of their business. This service warrants high range
of ski ll in the art of f inancial deal m a k i n g t h a t i n v e s t me n t
b a n k s s p e c i a l i z e i n . I t has become an important advisory
area at a time when Indian industry is passing through a
transformation to meet the demands of globalization.
The investment banking domain in M&A advisory is mainly in partnersearch, negotiations and deal structuring, valuation, due
dil igence and deal closu re. M& A ad visory is al so a n a rea
whe rei n inv est ment ban ks fac e competition from pure
advisory and professional firms and financial services companies.
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The key differentiate or between a firm designated as an investment bank
and a firm that operates as an M&A advisor is that an investment bank
in addition to performing an M&A advisory rolemay also:
Advise companies on matters related to the issue and placement ofstock
Act as an underwriter or agent for corporations and municipalitiesissuing securities
Maintain broker/dealer operations Maintain markets for previously issued securities
Offer advisory services to investors Hence some of the services or
business segments form the core of investment banking, others
provide invaluable support.
Interdependence between Different Verticals of Services
There are different verticals in investment banking and they do enjoy
synergies with one another. This inter-independence and
complementary existence has been explained below. M e r c h a n t
b a n k i n g l a r g e l y r e l a t e s t o m a n a g e m e n t o f p u b l i c
f l o a t a t i o n o f s e c u r i t i e s o r r e v e r s e f l o a t a t i o n s u c h a s
t h e b u y - b a c k s a n d o p e n o f f e r s , underwriting is an inherent
part of merchant banking for public issues. While, advisory andtransaction services help in maintaining an enduring relationship with
clients during those times when merchant banking is not a hot activity
duet depressed market conditions. The other segment of primary
market activity, i.e. venture capital and private equity has
equal synergies wi th merchant banking. The suppor t
business verticals in the secondary market operations also have
synergies with those in the primary equity and debt market segment
as far as investment banking is concerned. T h u s , i t m a y b e
s e e n t h a t t h e g r o w t h a n d s u c c e s s o f a n i n v e s t m e n t
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b a n k depends on its strengths in each vertical and how well it
combines them for synergies. To sum up, investment banking is a
business that is very sensitive to t h e e c o n o m i c a n d c a p i t a l
m a r k e t s c e n a r i o a n d t h e r e f o r e , t h e b r o a d e r
t h e platform of its operations, the more is the likelihood of an
investment bank surviving business cycles and sudden shocks from the
market.
REGULATORY FRAMEWORK FORINVESTMENTBANKING
Investment banking in India is regulated in its various facets
under separate legislations or guidelines issued under statute. The
regulatory powers a r e a l s o d i s t r i b u t e d b e t w e e n
d i f f e r e n t r e g u l a t o r s d e p e n d i n g u p o n t h e
constitution and status of the investment bank. Primarily the
capital market regulator (SEBI) governs pure investment banks, which
do not have presence in t h e l e n d i n g o r b a n k i n g b u s i n e s s .
Ho we v e r , p r i ma r i l y th e R BI re g u l a t es universal banks and
NBFC investment banks in their core business of banking or lending and
so far as the investment banking segment is concerned, they are also
regulated by SEBI. An overview of the regulatory framework is
furnished below:
a) At the constitutional level, all investment banking companies
incorporated under the Companies Act 1956 are governed by the
provisions of that Act.
b) Investment Banks that are incorporated under a separate statute such as
the SBI or the IDB I are r egula ted by their respec t ive
statute . IDBI i s in the process of being converted into a company
under the Companies Act.
c) Universal Banks are regulated by the Reserve Bank of India under the
RBI Act 1934 and the Banking Regulations Act which put
restrictions on the investment banking exposures to be taken by banks.The RBI has relaxed the exposure limits for merchant banking
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subsidiaries of commercial banks. Till now, such comp anies were
rest rict ing the ir exp osu re to a s ing le ent ity through the
underwriting business and other fund based commitments such as standby
facilities etc. to 25% of their net owned funds (NOF). Therefore, these
companies are now on par with other investment banks, which can do so
up to 20 times their NOF.
d) Investment banking companies that are constituted as non-banking
financial companies are regulated operationally by the RBI under
chapter III B (sec45H to 45QB) of the Reserve Bank of India Act,
1934. Under these sections RBI is empowered to issue direct ions in
the area of resource mobilization, accounts and administrative
controls. The following directions have been issued by the RBI sofar:
Non-Banking Financial Companies Acceptance of
Deposits(Reserve Bank) Directions, 1998.
NBFCs Prudential Norms (Reserve Bank) Directions, 1998.
e) Functionally, different aspects of investment banking are regulated
under the Securities and Exchange Board of India Act , 1992 and
the guidelines and regulations issued there under. These are listed
below:
Merchant banking business consisting of management of public
o f f e r s i s a l i c e n s e d a n d r e g u l a t e d a c t i v i t y u n d e r t h e
Se cu r i t i e s an d Exchange Boar d of Ind i a ( Mer chan t
Bankers) Rules 1992 and SEBI(Merchant Bankers) Regulations
1992.
Underwriting business is regulated under the SEBI
(Underwriters)Rules, 1993 and the SEBI (Underwriters) Regulations
1993.
T h e a c t i v i t y o f s e c o n d a r y m a r k e t o p e r a t i o n si n c l u d i n g s t o c k broking are regulated under the relevant by-
laws of the stock exchange a n d t h e S E B I ( S t o c k
b r o k e r s a n d S u b b r o k e r s ) R u l e s 1 9 9 2 a n d
Regulations 1992. Besides, foe curbing unethical trading practices, SEBIhas promulgated the SEBI (Prohibition of Insider Trading)
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Regula t i ons . 1992 and t he SEBI ( P r oh ib i t i on o f
F r a u d u l e n t a n d T r a d e P ra c t i c e s Relating to Securities
Markets) Regulations 1995.
The business of asset management as mutual funds is regulatedu n d e r t h e S E B I ( M u t u a l F u n d s ) R e g u l a t i o n s 1 9 9 6 .T h e b u s i n e s s o f venture capital and private equity by suchfunds that are incorporated in India is regulated by the SEBI (VentureCapital Funds) Regulations, 1996and by those that are incorporatedoutside India is regulated under the SEBI (Foreign Venture CapitalFunds) Regulations 2000. The business of institutional investing by foreign investment banks andother investors in Indian secondary markets is governed by the
SEBI(Foreign Institutional Investors) Regulations 1995.
f) Inves tment banks that are set up in India wi th foreigndirect inves tment ei ther as joint ven tures wi th Indianpa rt ner s or as fu ll y ow ne d su bs id ia ri es of the foreign entitiesare governed in respect of the foreign investment by the ForeignExchange Management, 1999 and the Foreign E x c h a n g eM a n a g e m e n t ( T r a n s f e r o r i s s u e o f S e c u r i t y b y aP e r s o n Resident outside India) Regulations 2000 issued there under asamended from time to time through circulars issued by the RBI.
g) Apart from the above specific regulat ions relating toinvestment banking, investment banks are also governed by otherlaws applicable to all other businesses such as thetax law, contractlaw, property law, local state laws, arbitration law and other general lawsthat are applicable in India.
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TREND ANALYSIS OF INVESTMENT BANKINGThe recent trends in investment banking have shifted sources ofprofitability or firms. In the last few years, the major trends in investment banking have
been:
Growth in equity business, particularly IPOs; Increase in mergers and acquisitionDominance of new-economy sectors, such as Technology and
telecom.The winners in the market have been the bulge bracket investment
banks and highly focused boutiques.T h e g r o w t h o f i n v e s t m e n t b a n k i n g a n d r e s e a r c h
c o s t s i s exceeding growth in revenues, especially for secondtier major bracket and boutique investment banks.
Recent Trends in Investment Banking
One of the trends that have been developing in the past few y e a r s i nt h e g l o b a l a n d I n d i a n i n v e s t m e n t b a n k i n g a r e n a ,i s t h e strong m e r g e n c e o f u n i v e r s a l b a n k s a h e a d o f p u r e i n v e s t m e n t b a n k s a s m a r k e t leaders.
These universal banks have the additional financial muscle of
their banking arms that add to their pure investment banking strengths.Pure investment banks have found it unmanageable to ma i n t a i n
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l e a d e r s h i p p o s i t i o n s d u e t o d i f f i c u l t m a r k e tcondi t ions and the economic downturn.
The year 2002 has been dubbed as the watershed year ininves tment banking. Global ly , universal banks such as the Cit igroup, JP M o r g a n C h a s e a n d D e u t s c h e B a n k a r e e m e r g i n g s t r o n g l y a g a i n s t p u r e investment bankssuch as Goldman Sachs and Morgan Stanley. This trend could probablyreappear in India as well with the emergence of SBI, ICICI, IDBI andKotak Mahindra Bank as strong universal banks
Case study on ICICI Securities Ltd.
ICICI Sec Ltd. was amongst the first Indian investment banks to form a
dedicated M&A pract ice and cont inues to be a leader by
provid ing innovative and unique solutions to achieve varied objectives
of the client. It also has a dedicated pract ice to assist companies
with capital mobilization through t he pr iv at e eq ui ty/ ve nt ur e
capi tal route across thei r l i fe cycle .
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T he y a ss is t c o m p a n i e s i n r a i s i n g c a p i t a l d u r i n g t h e
s e e d , g r o w t h a n d e x p a n s i o n a n d acquisition financing. They
are also at the forefront of capital markets advisory having been
involved in most major book building and fixed price offerings
over the last decade.
ICICI Sec is amongst the leading underwriters of Indian equity with
unparalleled execution capabilities. It has a dedicated
infrastructure vertical focused on assisting clients in identifying and
capitalizing on the opportunities thrown up by the all pervasive boom in
the Indian infrastructure sector.
Fixed income of Bonds and YieldsICICI Sec. Ltd. is an acknowledged leader in the Indian fixed
income and money markets, with a strong franchise across the
spectrum of interest rate products and services institutional
sales and trading, resource mobilization and research. One of the
first entities to be g r a n t ed P r im ar y De a l e r s h ip l i ce ns e
b y R B I , I - S e c h a s ma d e p i o n e e r i n g contributions since
inception to debt market development in India. The Fixed Income
Group features desks trading actively in government securities,
swaps and corporate bonds markets.
The bond research of the Fixed Income team is a benchmark for the
industry. Innovation and insight into rate markets drive I-Secs advice toclients. They actively assist clients in designing and marketing
interest rate structures to suit their objectives.
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Equities Dealing with Bulls and Bears
ICICI Securities Limited assists global institutional investors to make theright decisions through insightful research coverage and a client
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focused Sales and Dealing team. Mentions in various client
survey polls , commending this team for the quality of analysis and
client servicing standards, are a testimony to the quality of the team. So
welcome to the world of equities. Where Bulls and Bears often collide,
run amuck or even go awry.
To survive and excel you need a cool head and an analytical mind. With a
combined market experience of over 150 years, the equities team at ICICI
Securities comprises some of the finest minds in the country manning the
research desk, sales desk and the trading desks. But dont take their word
for it. Let some of finest equity magazines in the world do the job for
them: The only Indian research team to figure in the top ten rankings
conducted by Institutional Investor in 2005; Adjudged by Asia money asthe Best Brokerage House in 2003.
ICICI Securities SubsidiariesICICI Sec has wholly owned subsidiary, ICICI Brokerage Services Ltd.
(IBSL), whish buys and sells equities for their institutional clients.
ICICI Sec has a U.S. subs idiary, ICICI Sec Inc. , wh ich i s
a me mb er of th e National Association of Securities Dealers,
Inc. (NASD). As a result of this mem be rsh ip , IC IC I Se c In c.
can engage in p ermit ted act ivi t ies in the U.S. secur i t ies
markets . These act ivi t ies include deal ing in se cur i t ies
markets transactions in the United States and providing research and
investment advice to US investors.
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CONCLUSION
The Investment Banking industry is come of age and is now growing
by leaps and bounds . Inves tment Banking companies in
In di a h as j o i n e d h a n d s w i t h g l o b a l m a j o r s t o a d a p t t o
g l o b a l s t a n d a r d s a n d a l s o t o collaborate to work on cross
border transactions and participate in international offerings. Hence,
given the scope for investment banking in India, the future looks
bright for the i ndustr y as a who le in In dia. Ma ny morepu re merchant banks and advisory firms could convert
themselves into full service investment banks that would broaden the
market and make the service delivery much more efficient.
In addition, the technological and market developments shaping
the capital market would also provide an added impetus to the growth of
investment banking. The market regulator, Securities Exchange Board of
India (SEBI) has continuously played an effect ive role inincreasing transparency and has been able to put adequate safeguards
to protect general investors interest. T
his effort has been the single most important factor because investor
confidence is supreme and as long as investor confidence is high, both the
capital market and the investment banking industry will continue to do
well. Thus, investment banking can be quoted as
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Investment Banking the financial facilitator of market driven
capitalism and the economic catalyst of national and international
development
WEBLIOGRAPHY
www.wisegeek.com www.investorwords.com www.wikipedia.org www.google.com
BIBLIOGRAPHY
Book of Environment and management of financial service Investment Banking and Securities Trading
http://www.investorwords.com/http://www.wikipedia.org/http://www.wikipedia.org/http://www.investorwords.com/ -
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