invest banker final

8/8/2019 Invest Banker Final

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ROLES OFROLES OF

INVESMENTINVESMENTBANKERS IN INDIABANKERS IN INDIA

Presented By:Presented By:

Nikita Nikita JadhavJadhav (13)(13)

ChinankeeChinankee Jain (15)Jain (15)

KunalKunal MalodeMalode (30)(30)Ronak Ronak MehtaMehta (32)(32)

Dimple SinghDimple Singh (49)(49)



What is an Investment Bank?What is an Investment Bank?

An Investment bank is more specialize organization that takes inAn Investment bank is more specialize organization that takes in

your money and after analyzing the possible risk and economicyour money and after analyzing the possible risk and economic

conditions gives you advice to convert it into more money.conditions gives you advice to convert it into more money.

InvestmentInvestment banking, or banking, or II--banking is banking is the term used to describe thethe term used to describe the

business of raising capital for companies business of raising capital for companies..

Capital essentially means money. Companies need cash in order toCapital essentially means money. Companies need cash in order to

grow and expand their grow and expand their businesses businesses

IInvestmentnvestment banks sell securities to public investors in order to raise banks sell securities to public investors in order to raise

this cash. These securities can comethis cash. These securities can come in thein the form of stocks or form of stocks or bonds bonds



Investment banks in India are itself an institution whichInvestment banks in India are itself an institution which

generates funds in two different ways.generates funds in two different ways.

1.1. The first manner in which it works is by drawing publicThe first manner in which it works is by drawing public

funds via the capital market by way of selling stock in their funds via the capital market by way of selling stock in their

company.company.2.2. The other way in which it operates is to seek for ventureThe other way in which it operates is to seek for venture

capital or private equity, as a substitute for a stake in their capital or private equity, as a substitute for a stake in their

company.company.

The biggest investment banks include Goldman Sachs,The biggest investment banks include Goldman Sachs,

Merrill Lynch, Morgan Stanley Dean Witter, Salomon SmithMerrill Lynch, Morgan Stanley Dean Witter, Salomon Smith

Barney, Donaldson, Lufkin & Jenrette, J.P. Morgan andBarney, Donaldson, Lufkin & Jenrette, J.P. Morgan and

Lehman BrothersLehman Brothers



Breakdown Breakdown of an investment bank of an investment bank 1. Corporate Finance: 1. Corporate Finance: performs two performs two different functions:different functions:

A) MergersA) Mergers and acquisitionsand acquisitions advisory: bankersadvisory: bankers assist in negotiating and structuringassist in negotiating and structuring

a merger betweena merger between two companies.two companies.

Example: A Example: A company wants to buy another firm, then an investment bank company wants to buy another firm, then an investment bank

will helpwill help finalize thefinalize the purchase price, structure the deal, and generally ensure a purchase price, structure the deal, and generally ensure a

smooth transactionsmooth transaction..

B) Underwriting:B) Underwriting: shepherding the process of raising capital for a company. In theshepherding the process of raising capital for a company. In the

investment bankinginvestment banking world, capital can be raised by selling either stocks or bondsworld, capital can be raised by selling either stocks or bonds

toto investors.investors.



2.2. SalesSales

Salespeople take the form of: 1) the classic retail broker, 2) the institutionalSalespeople take the form of: 1) the classic retail broker, 2) the institutional

salesperson, or 3) the private client service representative.salesperson, or 3) the private client service representative.

Brokers develop relationships with individual investors and sell stocks andBrokers develop relationships with individual investors and sell stocks and

stock advice.stock advice.

Institutional salespeople develop business relationships with largeInstitutional salespeople develop business relationships with large

institutional investors. Institutional investors are those who manage largeinstitutional investors. Institutional investors are those who manage large

groups of assets, for example pension funds or mutual funds.groups of assets, for example pension funds or mutual funds.

Private Client Service (PCS) representatives lie somewhere between retailPrivate Client Service (PCS) representatives lie somewhere between retail

brokers and institutional salespeople, providing brokerage and money brokers and institutional salespeople, providing brokerage and money

management services for extremely wealthy individuals. Salespeople makemanagement services for extremely wealthy individuals. Salespeople make

money through commissions on trades made through their firms.money through commissions on trades made through their firms.

3. Trading3. Trading

Traders facilitate the buying and selling of stock, bonds, or other securitiesTraders facilitate the buying and selling of stock, bonds, or other securities

such as currencies, either by carrying an inventory of securities for sale or such as currencies, either by carrying an inventory of securities for sale or

by executing a given trade for a client. by executing a given trade for a client.

Traders make money by purchasing securities and selling them at a slightlyTraders make money by purchasing securities and selling them at a slightly

higher price. This price differential is called the "higher price. This price differential is called the "bidask bidask spread."spread."



4. R esearch4. R esearch

Research analysts follow stocks and bonds and make recommendations onResearch analysts follow stocks and bonds and make recommendations on

whether to buy, sell, or hold those securities.whether to buy, sell, or hold those securities.

Reputable research analysts can generate substantial corporate financeReputable research analysts can generate substantial corporate finance

business as well as substantial trading activity, and thus are an integral part business as well as substantial trading activity, and thus are an integral part

of any investment bank.of any investment bank.

5. Syndicate5. Syndicate

The hub of the investment banking wheel, syndicate provides a vital link The hub of the investment banking wheel, syndicate provides a vital link

between salespeople and corporate finance. between salespeople and corporate finance.

Syndicate exists to facilitate the placing of securities in a public offering, aSyndicate exists to facilitate the placing of securities in a public offering, a

knock knock--down dragdown drag--out affair between and among buyers of offerings and theout affair between and among buyers of offerings and the

investment banks managing the process.investment banks managing the process.



R ole of The Investment R ole of The Investment BankerBanker

Valerio Valerio Giannini Giannini has served as a principal or intermediary has served as a principal or intermediary in over 50 M&A transactions and as a director or CEO in over 50 M&A transactions and as a director or CEO of over a dozen private and public companies. He is a of over a dozen private and public companies. He is a principal of principal of NewCap NewCap Partners, a Southern California Partners, a Southern California

private investment banking firm. He was previously private investment banking firm. He was previously affiliated with the affiliated with the Ventana Ventana Growth Funds, served as a Growth Funds, served as a division president of the Geneva Companies, a division president of the Geneva Companies, a subsidiary of Chemical Bank; and as a principal of subsidiary of Chemical Bank; and as a principal of Cumberland Investment Group and with Kidder Cumberland Investment Group and with Kidder

Peabody & Co. He also held appointments as Director Peabody & Co. He also held appointments as Director of White House Operations and as a Deputy Assistant of White House Operations and as a Deputy Assistant Secretary of Commerce.Secretary of Commerce.



R ole of The Investment BankerR ole of The Investment Banker

1. Obtain Concurrence Of Expectations Of Value And Terms.1. Obtain Concurrence Of Expectations Of Value And Terms.The investment banker¶s first task is to determine that they and their prospectiveThe investment banker¶s first task is to determine that they and their prospectiveclient concur on value, which need not be a firm number client concur on value, which need not be a firm number -- it may be a range or it may be a range or ratios pending future performance, and will depend on terms.ratios pending future performance, and will depend on terms.

2. Help The Client Understand How A Potential Buyer Will View The Company.2. Help The Client Understand How A Potential Buyer Will View The Company.

The investment banker and their client must develop a mutual understanding of The investment banker and their client must develop a mutual understanding of

why and where a potential buyer will see value.why and where a potential buyer will see value.

3. Candidly Assess The Prognosis For Future Challenges.3. Candidly Assess The Prognosis For Future Challenges.

If there are any potential problems related to the company and its business, theyIf there are any potential problems related to the company and its business, theyneed to be discussed candidly and early in the process. Even a relatively minor need to be discussed candidly and early in the process. Even a relatively minor issue can kill a good dealissue can kill a good deal

4. Develop, Validate And Document Historical And Projected Financials.4. Develop, Validate And Document Historical And Projected Financials.

To help the company recast historical numbers to add back discretionary expensesTo help the company recast historical numbers to add back discretionary expensesand model future performance. Projections should be optimistic but realisticand model future performance. Projections should be optimistic but realistic



5. Achieving Strategic Ob jectives5. Achieving Strategic Ob jectives

Investment bankers meet regularly with management to discuss whatInvestment bankers meet regularly with management to discuss whatobjectives the company is strategically focusing on. The banker alsoobjectives the company is strategically focusing on. The banker alsoneeds to provide an outside view of what competitor companies are doingneeds to provide an outside view of what competitor companies are doingand what, if any, strategic complications this provides.and what, if any, strategic complications this provides.

6. Due Diligence6. Due Diligence

If a company has made a bid for another company an outside third partyIf a company has made a bid for another company an outside third partysuch as the investment banker will need to supply an opinion regardingsuch as the investment banker will need to supply an opinion regarding

the careful study and decision making that went into acquiring thethe careful study and decision making that went into acquiring thecompany. This is called a due diligence report.company. This is called a due diligence report.

7. Fairness Opinions7. Fairness Opinions

Document necessary for the purchase of one company by another is theDocument necessary for the purchase of one company by another is thefairness opinion. The fairness opinion is written by the investment banker fairness opinion. The fairness opinion is written by the investment banker

and provides detailed determinations, often using several investmentand provides detailed determinations, often using several investmentmetrics, to demonstrate that the company did not overpay for the acquiredmetrics, to demonstrate that the company did not overpay for the acquiredcompany.company.



8. Managing Debt Offerings8. Managing Debt Offerings

Investment bankers suggest ways to finance or refinance financialInvestment bankers suggest ways to finance or refinance financialobligations. In a period of low interest rates a banker mayobligations. In a period of low interest rates a banker may

demonstrate cost savings by redeeming outstanding debt at higher demonstrate cost savings by redeeming outstanding debt at higher interest rates and substituting a new, lower interest cost issue.interest rates and substituting a new, lower interest cost issue.

9. Managing Stock Offerings9. Managing Stock Offerings

Investment bankers are responsible for bringing new companies toInvestment bankers are responsible for bringing new companies tothe public markets for the first time (also called an IPO or initialthe public markets for the first time (also called an IPO or initial

public offering), raising capital for privately held companies, or public offering), raising capital for privately held companies, or improving the capital strength of existing public companies byimproving the capital strength of existing public companies byredeeming debt with additional stock offerings.redeeming debt with additional stock offerings.

10. Stay Until The End10. Stay Until The End

Aprofessional investment banker will remain on the scene, on duty,

Aprofessional investment banker will remain on the scene, on duty,until the deal finally closes, even if it¶s midnight New Years eve.until the deal finally closes, even if it¶s midnight New Years eve.

There are many things that can be missing or go wrong at the lastThere are many things that can be missing or go wrong at the lastminute, and, having been there numerous times before, theminute, and, having been there numerous times before, theinvestment banker may be just the person to help.investment banker may be just the person to help.



List of Top 10 Investment Bank s in List of Top 10 Investment Bank s in

IndiaIndia1.1. AvendusAvendus CapitalCapital

Providing mergers and acquisitions, fixed returns, controlled finance, calculated advisoryProviding mergers and acquisitions, fixed returns, controlled finance, calculated advisory

facilities and Private Equity Syndication to its customers ranging from investors tofacilities and Private Equity Syndication to its customers ranging from investors to

corporatescorporates..

It presently concentrates on sectors where Indian firms have strategic expansionIt presently concentrates on sectors where Indian firms have strategic expansion

advantage namely Healthcare, Pharmaceuticals, IT Services, Consumer goods,advantage namely Healthcare, Pharmaceuticals, IT Services, Consumer goods,

manufacturing, etc.manufacturing, etc.

2. Bajaj Capital2. Bajaj Capital

PProvides customrovides custom--made Fiscal Planning facilities and investment consultation to themade Fiscal Planning facilities and investment consultation to the

investors, organizational investors,investors, organizational investors, corporatescorporates, high income patrons and Non, high income patrons and Non--ResidentResident

Indians (NRIs).Indians (NRIs).

Bajaj provides an extensive range of investment schemes such as general insurance, lifeBajaj provides an extensive range of investment schemes such as general insurance, life

insurance, mutual funds, etc to both public and private institutions.insurance, mutual funds, etc to both public and private institutions.

3.3. CholamandalamCholamandalam Investment & Finance CompanyInvestment & Finance Company

PProvides an extensive range of facilities to small and medium sized enterprise,rovides an extensive range of facilities to small and medium sized enterprise, corporatescorporates,,

customers and comprehensive banking activities across Middle East and Asia.customers and comprehensive banking activities across Middle East and Asia.



List of Top 10 Investment Bank s in List of Top 10 Investment Bank s in

IndiaIndia4. ICICI Securities Ltd4. ICICI Securities Ltd

Functional areas such as consultant services, fiscal good distribution, Equity CapitalFunctional areas such as consultant services, fiscal good distribution, Equity Capital

MarketsAdvisory Services, etc.MarketsAdvisory Services, etc.

5. IDFC5. IDFC

332 projects accruing a profit of up to Rs 2, 20, 400 million.332 projects accruing a profit of up to Rs 2, 20, 400 million.

The sectors under IDFC's financial assistance are infrastructure,The sectors under IDFC's financial assistance are infrastructure, agriagri related business,related business,transportation, healthcare, tourism and others.transportation, healthcare, tourism and others.

6.6. K otak K otak Mahindra Capital CompanyMahindra Capital Company

Undertaken the developmental work of most ground breaking advances in the Indian capitalUndertaken the developmental work of most ground breaking advances in the Indian capital

markets comprising the launch of book building and Qualified Institutional Placementsmarkets comprising the launch of book building and Qualified Institutional Placements

(QIPs)(QIPs)

7. SBI Capital Markets7. SBI Capital Markets

Investment bank and project consultant, aiding local firms in capital enlistment endeavorsInvestment bank and project consultant, aiding local firms in capital enlistment endeavors

for last many years.for last many years.

Asian Development Bank (ADB) possesses 13.84% stakes in equity segment of SBICAPS.Asian Development Bank (ADB) possesses 13.84% stakes in equity segment of SBICAPS.



List of Top 10 Investment Bank sList of Top 10 Investment Bank s

in Indiain India8. Tata Investment Corporation Limited (TICL)8. Tata Investment Corporation Limited (TICL)

The chief source of return for the firm entails income on investment trading andThe chief source of return for the firm entails income on investment trading and

income accrued on dividend.income accrued on dividend.

Activities constitute mainly of endowing in longActivities constitute mainly of endowing in long--standing investments in equity of standing investments in equity of

the firms in various sectors.the firms in various sectors.

9. Yes Bank 9. Yes Bank

Some of the transactions incorporate private equity syndication, mergers &Some of the transactions incorporate private equity syndication, mergers &

acquisitions and IPO consultation.acquisitions and IPO consultation.

10. UTI Securities Ltd10. UTI Securities Ltd

The firm has been offering all sorts of investment associated activities whichThe firm has been offering all sorts of investment associated activities which

incorporates investment banking and corporate consultation facilities.incorporates investment banking and corporate consultation facilities.



World¶s top investment bank s byWorld¶s top investment bank s by

assetsassets



Investment bank ing revenue byInvestment bank ing revenue by

activityactivity



R evenues of investment bank s byR evenues of investment bank s by

regionregion

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