Investment Banking

Finance

Made by : Keshav Chadha

A3906408330
 What is Investment Banking ?
 ‘Investment Banking’ as term suggests, is concerned with the
primary function of assisting the capital market in its function
of capital intermediation .
 Investment banks assist public and private corporations in
raising funds in the capital markets (both equity and debt), as
well as in providing strategic advisory services for mergers,
acquisitions and other types of financial transactions.
 Any firm contemplating a significant transaction can benefit
from the advice of an investment bank.
 Organizational Structure
Front • Investment bankers prepare idea pitches that they bring to meetings with
their clients, with the expectation that their effort will be rewarded with a

Office mandate when the client is ready to undertake a transaction.

Middle • Risk Management involves analyzing the market and credit risk that
traders are taking onto the balance sheet in conducting their daily trades,
and setting limits on the amount of capital that they are able to trade in

Office order to prevent 'bad' trades having a detrimental effect to a the overall
organization.

Back • Operations involve data-checking trades that have been conducted,

ensuring that they are not flawed and transacting the required transfers.

Office • The staff in these areas are often highly qualified

 Services Provided
 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.
 Mergers & 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 etc.
 Sales & 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.
 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
 Principles of Investing
 Start Investing Now !
 Know yourself
 Get your financial house in order
 Develop a long term plan
 Buy stocks
 Investigate before you Invest
 Develop the right Attitude
 Get help if you Need it !
Recent evolution of the Business
 New products
 Investment banking is one of the most global industries and
is hence continuously challenged to respond to new
developments and innovation in the global financial markets.
 Throughout the history of investment banking, many have
theorized that all investment banking products and services
would be commoditized.
 New products with higher margins are constantly invented
and manufactured by bankers in hopes of winning over
clients and developing trading know-how in new markets.
 Possible conflicts of interest
 Potential conflicts of interest may arise between different
parts of a bank, creating the potential for financial
movements that could be market manipulation.
 Many investment banks also own retail brokerages. Also
during the 1990s, some retail brokerages sold consumers
securities which did not meet their stated risk profile.
 Since investment banks engage heavily in trading for their
own account, there is always the temptation or possibility
that they might engage in some form of manipulation.
 INVESTOR PROTECTION
 The term "Investor Protection” is a wide term encompassing various
measures designed to protect the investors from malpractices of
companies, brokers, merchant bankers issue managers, Registrars of new
issues, etc.
 "Investors Beware" should be the watchword of all programmes for
mobilisation of savings for investment. As all investment has some risk
element, this risk factor should be borne in mind by the investors and
they should take all precautions to protect their interests in the first place.
 If caution is thrown to the winds and they invest in any venture without
a proper assessment of the risk, they have only to blame themselves.
 But if there are malpractices by companies, brokers, etc, they have every
reason to complain. Such grievances have been increasing in number in
more recent years.
 PORTFOLIO
MANAGEMENT SERVICES
 A list of all those services and facilities that are provided by
a portfolio manager to its clients, relating to the management
and administration of portfolio of securities or the funds of
clients, is referred to as ‘portfolio management services’.
 The term ‘portfolio’ means the total holdings of securities
belonging to any person.
 Portfolio Manager – A person who exercises any degree of
discretion as to the investments or management of the
portfolio of securities or the funds of the clients, as the case
may be .
 Conclusion
 I would like to conclude by saying that investment banking
is a fairly broad field , and I tried studying it and knowing
what exactly it is to the best of my abilities .
 Any discrepancies in the report and/or presentation are due
to the changing environmental factors like inflation, interest
rate hike and the recent slump in the market etc.
Thank You !