Importance Of Investment Baking In An

Economy

Presented to
The Department of Finance at
K. J. Somaiya Institute of Management Studies and
Research, Mumbai

In Partial Fulfillment
of the Requirements for the MMS Finance

by
Anuj Shah
MMS Finance
Roll no. 007

Under the Supervision of

Prof. Dr Pankaj Trivedi
Professor, K.J. SIMSR
 STUDENTS DECLARATION

I, Anuj Shah, Roll No. 007 declare that the Masters Thesis titled
Importance of Investment Banking in an Economy,
submitted by me in complete fulfillment of the requirements for
the award of MMS at K J Somaiya Institute of Management Studies
and Research, Mumbai, is the record of the work carried out by
me during the period from July, 2016 to February, 2017, under the
guidance of Prof. (Dr.) Pankaj Trivedi.

To the best of my knowledge the thesis is a record of authentic

work carried out by me during the said period and has not been
submitted to any other University or Institute for the award of any
degree/diploma.

I further declare that the material obtained from other sources

have been duly acknowledged in the thesis.

Signature of the Candidate

Date: 15/03/2017
Place: Mumbai

2
CERTIFICATE OF FACULTY GUIDE

Certified that the work incorporated in the masters thesis titled,

Importance of Investment Banking in an Economy
submitted by Anuj shah was carried out under my supervision.

This is his original work and any such materials that have been
obtained from other sources have been duly acknowledged in the
thesis.

Signature of the Faculty Guide

Date: 15/03/2017
Place: Mumbai

3
 Acknowledgements

I thank my guide Prof. (Dr.) Pankaj Trivedi for her tremendous

support and encouragement and above all her valuable direction
that kept me going and inspired me to perform better. It makes
me feel extremely glad to present the thesis on Importance of
Investment Banking in an Economy.

I would take this opportunity to thank all the mentors from

Finance Department of K.J. Somaiya Institute of Management
Studies and Research, Mumbai for their relentless and continuous
support. I would also take this opportunity to thank my course
coordinator Prof. SNV Sivakumar to have been a moral support
and mentor in all my endeavors.

I would also like to thank all those who were directly or indirectly
involved in grappling up with the problems during the study. Their
help was of enormous value and much appreciated.

Anuj Shah
Roll No: 007
MMS-Finance
2015-17

4
 Index
Sr Topics Pag
No e
. No.
1 Introduction to Investment Banking 6

2 Literature Review 7

3 After the 2008 Crisis 11

4 Importance of Investment Banking 13

5 Types of Investment Banking Firms 14

6 Services of Investment Banks 16

7 Organizational Structure of Investment Banks 19

8 Key Laws Governing Investment Banking Practices 21

9 Business Portfolio of Investment Banks 23

10 Investment Banker 25

11 Challenges Faced by Investment Banks 27

12 Role of Investment Banking in Economy 28

13 Scope of Investment Banking in India 29

14 Investment Banking v/s Wealth Management 30

15 Top 10 Investment Banks in India 31

16 Webliography 34
5
 Introduction to Investment
Banking
Investment banking is a special segment of banking operation
that helps individuals or organizations raise capital and provide
financial consultancy services to them. They act as intermediaries
between security issuers and investors and help new firms to go
public. They either buy all the available shares at a price estimated
by their experts and resell them to public or sell shares on behalf of
the issuer and take commission on each share.

It is among the most complex financial mechanisms in the

world. They serve many different purposes and business entities.
They provide various types of financial services, such as proprietary
trading or trading securities for their own accounts, mergers and
acquisitions advisory which involves helping organizations in M&As,
leveraged finance that involves lending money to firms to purchase
assets and settle acquisitions, restructuring that involves improving
structures of companies to make a business more efficient and help
it make maximum profit, and new issues or IPOs, where these banks
help new firms go public.

Investment banking plays a crucial role as mediator between

companies that issue securities and the individuals or entities
wishing to purchase them. In this respect, investment banking
operates along two main lines: a "buy" side and a "sell" side. "Buy"
side operations include services such as securities trading

6
 and portfolio management. "Sell" side activities
include underwriting new lines of stock, marketing financial products
and publishing financial research.

Literature Review
PURPOSE:

The purpose of this study is to understand the importance of

Investment Banking in an Economy. The study also tries to explain
the various services that are offered by the investment banks to
their clients and what are the organizational structures of these
banks.

LITERATURE REVIEW

IPO pricing as a function of investment banks past

mistakes: Case of Facebook

On May 18, 2012 Facebook held its initial public offering (IPO),
raising over $16 billion making it one of the largest IPOs in history.
To the surprise of many investors, there was no underpricingthe
stock closed the first day of trading flat from its offer price. The
Facebook IPO was described as not only disappointing but also
detrimental to the broader market. We explore why one IPO
should have such widespread consequences. We document that
the IPO market was silent for 41 days following Facebook. When it
re-opened 41 days later, the average level of underpricing
increased from 11% pre-Facebook to 20% post-Facebook. The

7
 common blame was an overall increase in risk-aversion among
investors. We offer an alternative explanation. We show that the
entire increase in underpricing is concentrated in the IPOs of the
Facebook lead underwriters. We find no statistical difference in
underpricing pre- and post-Facebook for non-Facebook
underwriters. We argue that investment bank loyalty to their
institutional investor client based propelled the Facebook
underwriters to increase underpricing to compensate for the
perceived losses on Facebook.

The Value of Investment Banking Relationships: Evidence

from collapse of Lehman Brothers

This is a paper by Chitru S. Fernando, Anthony D. May & William L.

Megginson who examined the long-standing question of whether
firms derive value from investment bank relationships by studying
how the Lehman collapse affected industrial firms that received
underwriting, advisory, analyst, and market-making services from
Lehman. Equity underwriting clients experienced an abnormal
return of around -5%, on average, in the 7 days surrounding
Lehman's bankruptcy, amounting to $23 billion in aggregate risk-
adjusted losses. Losses were especially severe for companies that
had stronger and broader security underwriting relationships with
Lehman or were smaller, younger, and more financially
constrained. Other client groups were not adversely affected.

Analyst Impartiality and Investment Banking Relationships

This study examines whether investment banking ties influence

the speed with which analysts convey unfavorable news. We
hypothesize that affiliated analysts have incentives to respond
promptly to good news but prefer not to issue bad news about
client companies. Using duration models of the time between an
equity issue and the first downgrade, we find affiliated analysts
are slower to downgrade from Buy and Hold recommendations
and significantly faster to upgrade from Hold recommendations, in

8
 both within-analyst and within-issuer tests. We also find affiliated
analysts issue recommendations sooner and more frequently after
an offering than unaffiliated analysts, and that unaffiliated
analysts are more likely than affiliated analysts to drop coverage
of sample firms. Our findings indicate that banking ties increase
analysts' reluctance to reveal negative news, and that reform
efforts must carefully consider the incentives of affiliated and
unaffiliated analysts to initiate coverage and convey the results of
their research.

Banker Loyalty in Mergers and Acquisitions

When investment banks advise on merger and acquisition (M&A)

transactions, are they fiduciaries of their clients, gatekeepers for
investors, or simply arm's-length counterparties with no other-
regarding duties? Scholars have generally treated M&A advisors
as arm's-length counterparties, putting faith in the power of
contract law and market constraints to discipline errant bank
behavior. This Article counters that view, arguing that investment
banks are rightly characterized as fiduciaries of their M&A clients
and thus required to loyally serve client interests. This Article also
develops an analytical framework for assessing the liability rules
that will most effectively deter disloyalty on the part of
investment banks toward their M&A clients. Applying optimal
deterrence theory, the framework shows why holding only banks
liable for disloyalty is unlikely to effectively deter such disloyalty.
Instead, it suggests the need for fault-based liability rules to be
applied to corporate directors (of M&A clients) for their oversight
of the banks they engage as well as the potential need for public
enforcement of certain hard-to-detect conflicts. Applying this
framework, this Article assesses existing law, focusing on recent
Delaware decisions, generally supporting that law but arguing
that it is unlikely to effectively deter advisor disloyalty.

9
 Traders vs. Relationship Managers: Reputational Conflicts
in Full-Service Investment Banks

We present a model that explains why investment bankers

struggle to manage conflicts of interest. Banks can build a type
reputation for technical competence by performing complex deals
that may not serve their clients' interest; on the other hand,
banks can sustain a behavioral reputation by refraining from
doing so. A behavioral reputation is a luxury reserved for banks
that have proven their abilities. The model sheds light on conflicts
between the trading and advisory divisions of investment banks,
as well as the consequences of technological change for time
variation in the relative strength of behavioral- and type-
reputation concerns.

REFERENCES:

http://search.ebscohost.com/login.aspx?
direct=true&AuthType=cookie,ip,athens,uid,url&db=bth&AN=110
084339&site=eds-live

http://search.ebscohost.com/login.aspx?
direct=true&AuthType=cookie,ip,athens,uid,url&db=edb&AN=70
359938&site=eds-live

http://search.ebscohost.com/login.aspx?
direct=true&AuthType=cookie,ip,athens,uid,url&db=bth&AN=115
578859&site=eds-live

10
 http://search.ebscohost.com/login.aspx?
direct=true&AuthType=cookie,ip,athens,uid,url&db=bth&AN=115
437020&site=eds-live

http://search.ebscohost.com/login.aspx?
direct=true&AuthType=cookie,ip,athens,uid,url&db=bth&AN=177
15235&site=eds-live

After the 2008 Crisis

In 2008, the global depression was triggered by subprime
mortgages, also known as subprime crisis, due to poor underwriting
practices, lack of regulation and highly complexed financial
instruments. This crisis led to failure of most reputed big financial
firms like Lehman brothers.

Post crisis, a new was legislation was approved, Dodd-Frank

Act, a bill that was made eradicate the regulatory loop holes which

11
led to the crisis, by increasing capital requirements as well as
bringing hedge funds, private equity firms, and other investment
firms considered to be part of a minimally regulated shadow
banking system.

These entities would raise capital and invest like banks but did
not come under regulations that gave them a high leverage and
exacerbated system-wide contagion. The jury is still out on Dodd-
Franks efficacy, and the Act was heavily criticized by both those
who argue for more regulation and those who believe it will stifle
growth.

Pure investment banks like Goldman Sachs and Morgan Stanley

traditionally benefited from less government regulation and no
capital requirement than their full service peers like UBS, Credit
Suisse, and Citi.

During the financial crisis, however, the pure investment banks

had to transform themselves to bank holding companies (BHC) to
get government bailout money. The flip-side is that the BHC status
now subjects them to the additional oversight.

Industry Prospects After the Crisis

Investment banking advisory fees in 2010 were $84 billion
globally, the highest level since 2007, while 2011 saw a significant
decline in fees. The future of the industry is a highly debated topic.
There is no question that the financial services industry is going

12
through something pretty significant post-crisis. Many banks had
near-death experiences in 2008 and 2009, and remain hobbled.
2011 saw much lower profitability for many of the largest financial
institutions. This directly impacts bonuses for even the entry level
investment banker, with some pointing to smaller fractions of ivy
league graduating classes going into finance as a harbinger of a
fundamental shift.

That being said, those trying to break into the industry will find
that compensation is still high compared to other career
opportunities. Also, the job function of an M&A professional has not
dramatically changed, so the professional development
opportunities havent changed.

Importance of Investment
Banking
13
 Investment banks helps in growth of economy of a country
through developing the commercial section of country. It provides
funds for growth of industry which in turn generates more
employment and more profits for the company. This helps country to
reduce unemployment, and improves the products and service
quality in country

Also it creates a large capital amount to be dispersed,

therefore it helps in funding more businesses in country. This gives
opportunities for more startups in countries and helps in making
more products within country itself reducing the burden on imports
slowly and increasing exports if the quality is of international level.

Investment banks also acts as financial advisors of most

companies, individuals or organizations. They deal in millions and
billions of investments, therefore proper investment techniques and
instrument are a priority. Investment banks help them to invest in
securities or basically help them in properly utilize the surplus
money. In this way companies make more money over their
operating profits which can be utilize for new project development.
So investment bankers give advice to companies on when, which,
how much to invest so as to generate maximum profit.

Investment banks also get many investors together to the

companies that will issue and broker securities. They help
companies in IPO so that they can get public raise capital for to grow
and also expand internationally if needed. So Investment banks take
care of all the compliance and can help generate funds required for
companies to get listed.

14
 Types of Investment Banking
Firms

Investme
nt Banks

Full Service
Firm

Asset
Boutique Commercial Brokerage
Management
Firms Banks Firms
Firms

1 Full-Service Firms
Full Service firms are largest in number of investment banks
present covering the largest area. They deal in underwriting, M&A,
AMC etc. They basically deal in all business possible acting as a one
stop solution.

1.Commercial Banks
Commercial Banks come under Section 20 which refers to
subsidiaries formed under section 20 of the Glass-Steagall Act, they
are allowed to carry on some investment banking services compared
to Full Service Firms.

15
 2.Boutique Firms
Boutique firm deal in special specific area like M&A or AMC
unlike commercial or full service firms who deal in more than one
are

3.Brokerage Firms
These firms offers only trading services to retail & institutional
clients. They have huge investor base which is also used by
underwriters to place issues.

4.Asset Management Firms

Asset Management firms deal in management service. They
carry on investment activities like managing funds, wealth
management, portfolio management, investment in securities etc.

16
 Services of Investment Banks
The following are the major services offered of Investment Banking
explained in brief:

1 Raising Capital & Security Underwriting.

Investment banks act as middle men in a transaction between
a company issuing new securities and the public purchasing it. A
company issues a bonds to get additional funds for new project or
retiring an old debt. So they hire investment banks which
determines the value, risk factor. They also underwrite and sell this
new bonds.

An investment bank also ensures that the buyers are

institutional investors like mutual funds who purchase the stock or
bonds issued before they are sold in market, so they become the
intermediaries between issuers of securities and investors.
Investment banks would then purchase the fresh issued securities
from issuer for a negotiated price. The issuer gets the capital and
work on its new project or retiring the debt, while the investment
bankers will resell this security to its primary investors at
comparatively higher profits, thus making small profits from this.

5.Mergers & Acquisitions

17
 Mergers & Acquisition is the most important source of income
for Investment banks. They charge a high fee for this service and
therefore gain maximum from it. Its employees in this segment are
the highest paid employees in the firm as they contribute the
maximum in firms revenues. Therefore, this people go through a
rigorous process before being hired for the job.

Investment banks, in this services usually perform activities

like valuation of business, its assets, negotiating the terms of
merger or acquisition, documentation as well as the implementation
of the deal. JP Morgan, Credit Suisse, Goldman sach specialized in
Mergers & Acquisition advisory and deal in therefore in large
volumes.

Investment banks acts also like advisory board over merger &
acquisition deal. They apparently advice the firms to go for this
company or even in terms of price or the value of the deal so as the
company who approached gains the maximum benefit and meets its
own needs. Investment banks also themselves may approach a
company for a deal if they find a good potential in firm.

6.Sales & Trading and Equity Research.

Investment banks also carry out selling and trading of
securities for institutional investors like Mutual Funds or pension
funds. Even hedge funds institution use investment bankers in order
to trade to securities. They become the link between the buyers and
sellers of securities, sometimes even buy and sell them in order to
smoothen the process of trading. Therefore, the market security

18
being traded becomes more liquid. Investment banks will earn its
revenues by charging commission fees on the trade.

Investment bank also helps in trading of securities

underwritten by banks in secondary market. Once the securities
have been underwritten and price it also need to have buyers for in
markets. Therefore, investment banks builds relationship with the
buyers so as to persuade them to purchase these securities and
executes the trade more efficiently.

7.Retail and Commercial Banking.

Before 1999, the Glass-Steagall Act prevented commercial
banks from certain activities and allowed activities like money
lending, opening accounts and for investment banks like advisory for
merger and acquisitions, underwriting of securities etc. but post the
1999 there was deregulation in financial industry which now allowed
the banks to offer various other services.

Investment banks were now allowed to offer brokerage to

individual customers too. So now they would deal with institutional
investors as well as individual investors in market unlike earlier
which was not allowed to them. This gave them more opportunities
and bigger market to operate in and therefore increase it revenues

8.Research
Investment banks does research and write reports on
companies in order to facilitate buying or selling of securities. It is

19
not high revenue generating service but aids in its other service like
advisory or merger and acquisition services.

9.Risk Management
Like research, Investment banker also carry out risk
management activity by analyzing market and the ability of traders
to take risk. In other word how much risk they can take to earn the
desired goal set by client and therefore work within the parameters
set by client.

Organizational Structure of
Investment Bank
Investment banks are split up into front office, middle office,
and back office. Each sector is very different yet plays an important
role in making sure that the bank makes money, manages risk, and
runs smoothly.

20
 Research
Sales & Trading
Ofce Investment Banking
Front

Compliance
Financial Control
Corporate Strategy
Ofce
Risk Management
Middle

Technology
Operation
Ofce
Back

1 Front Office
The front office of investment bank is the most crucial part of
bank. It generates the maximum revenue and carries out function
like research, sale and trading. Here the bank helps its client to raise
funds in capital market. It also becomes advisor for them in merger
and acquisition deals. The front office also carries the buying and
selling function of securities for its clients. The research function is
also carries out by the front office as it is important to have
adequate data before advising or carrying our sales or trading
activities for its clients.

10. Middle Office

The main objective of the middle office is to monitor that the
bank does not get engage in any activities that will have negative

21
impact on the firms health. They deal in functions like risk
management and compliance on large. They often interact with
front office to keep a check the company is taking limited risk while
underwriting certain securities

1.Back Office
The back office is more of a support office to the front office. It
mostly deals with operations and technology part of the firm

Key Laws Governing

Investment Banking Practices
In the absence of a comprehensive piece of legislation
governing financial services in India, various services are regulated

22
through a variety of Acts and Rules and by different regulators.
Investment Banking in India is regulated by various legislations and
the regulatory powers are also distributed between different
regulators depending on the constitution and status of the
investment bank. Pure investment banks that do not have presence
in the lending or banking business are governed primarily by the
capital market regulator Securities and Exchange Board of India
(SEBI). However, multi-national banks and non-banking financial
corporations which are investment banks are regulated primarily by
the Reserve Bank of India (RBI) in their core business of banking or
lending and insofar as the investment banking segment is
concerned, they are also regulated by SEBI. An overview of the
regulatory framework is as under:

a) All investment banking companies incorporated under the

Companies Act 1956, are governed by the provisions of that
Act.

b) Multi-national banks are regulated by the Reserve Bank of India

under the Reserve Bank of India Act, 1934 and the Banking
Regulation Act, 1949.

c) Investment banking companies that are constituted as non-

banking financial companies are regulated operationally by the
RBI under Chapter IIIB of the RBI Act, 1934.

d) Functionally, different aspects of investment banking are

regulated under the Securities and Exchange Board of India
(SEBI) Act, 1992 and the guidelines and regulations issued
thereunder. These are as follows:

23
 i. SEBI (Issue of capital & Disclosure Requirements)
regulations 2009

ii. SEBI (Substantial Acquisition of Shares and Takeovers)

Regulations 2011

iii. SEBI (Prohibition of Insider Trading) Regulations 1992

iv. SEBI (Foreign Institutional Investors) Regulations 1995

v. SEBI (Venture Capital Funds) Regulations 1996

vi. SEBI (Foreign Venture Capital Investors) Regulations 2000

vii. SEBI (Mutual Funds) Regulations 1996

viii. SEBI (Merchant Bankers) Regulations 1992

ix. SEBI (Buy-Back of Securities) Regulations, 1998

x. Private Limited Company and Unlisted Public Limited

Company (Buy-Back of Securities) Rules, 1999

xi. SEBI (Underwriters) Regulations, 1993

xii. Securities Contracts (Regulation) Act,1956

e) Investment banks that are set up in India with foreign direct

investment are governed in respect of the foreign investment
by the Foreign Exchange Management Act, 1999.

f) Apart from the above specific regulations relating to

investment banking, investment banks are also governed by
other general laws applicable to all other businesses in India
like tax laws, contract laws, arbitration law etc.

24
 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
services portfolio which is offered to clients. However, these distinct
segments are handles either on the same balance sheet or through
subsidiaries and affiliates depending upon the regulatory
requirements in the operating environment of each country.

All these activities are segmented across three broad

platforms-equity market activity, debt market activity and merger
and acquisitions. In addition, given the structure of the market there
is also a segmentation based on whether a particular investment
bank belongs to a banking parent or is a stand-alone pure
investment bank. Investment Banking encompasses wide areas of
capital market based businesses and services and has a significant
financial exposure to capital market.

Though investment banks also earn a significant component of

their income from non-fund based activity, it is their capacity to
support the clients with fund-based services, which distinguishes
them from pure merchant banks. In US capital market, investment
banks underwrite the issues or buy them outright (i.e. Wholesale
basis) and sell them later to retail investors thereby taking upon
themselves significant financial exposure to client
companies. Besides, being such large financial power houses

25
themselves, the global investment banks plays a major role as
institutional investors in trading and having large holdings of capital
market securities.

As a dealer, they take the positions and make a market for

many securities both in equity and derivatives segments. They hold
large inventories and therefore influence the direction of market.
Goldman Sachs, Salomon Brothers, Merrill Lynch, Rothschild and
others are significant market investors.

The global mergers and acquisitions business is very large.

Investment bank plays 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
other occasions wherein investment banks manage private equity
fund and they also represent their investors such buy-out deals.

Some investment banks in overseas markets also specialize in

other segments such as management of hedge funds, bullion trade,
commodity hedges, real estate and other exotic markets.

26
 Investment Banker
The main objective of investment banker is raising capital for
various institutions like companies, government etc. they are the
representatives of Investment banks who carry out the banks
services of trading, advisory etc. Advice on merger and acquisition
or a specific advice on type of process to be adopted even on
decision like where when to invest in the current market is the job of
investment banker

Some Skills That Are Must for an Investment

Banker
1 Problem solving and analytical skills
For an investment banker, problem solving and analytical skill
are the most important skill. He has to deal with a lot calculations
and analyze the market. They are required to analyze the market
trends, quickly calculate the numbers so as to arrive at decisions on
investing activities.

11. Attention to detail

27
 Investment bankers should also be very observant and be able
to analyze whatever they look quickly. Time is very important factor
and therefore he must be able to get details in deep in one go and
identify the changes in markets and opportunities available

12. Communication skills and team orientation

An investment banker needs to have great communication
skills. He needs to express this analytical skill and be able to present
to its clients too. Clients may not always be easily convincible but
its the job of investment banker to persuade him to deal with him
so as the firm earns. Therefore, investment bankers need to be
confident, verbally strong and very persuasive so that they can get
more clients for the firm and earn high revenues for firm

13. Good attitude and strong personality

Investment bankers job is a very stressful. He needs to be able
to be fully dedicated to is work. he has to be always ready to answer
the clients, be ready to face their query and be able to deliver under
high pressure situation. they need to be highly confident, energetic
and hard working for the firm to prosper

14. Time-management and ability to multitask

Time management is another important thing for wealth
management. The market is dynamic and changes every second so
he cannot afford to miss a single market info as it may cost him a
lot. He has to track market trends as well as analyze and also report
to his clients as well as his seniors. Therefore, he must be able to
multi task and manage time very efficiently

28
 15. Initiative
An investment bank wants its employee to be and initiator i.e.
come up with new ideas himself and does some assessment on his
own. He needs to work and think out of the box and take some steps
on his own. He cannot be the one always relying on his superior to
tell him what is next to be done. For instance, he can assess a
complicated report comprehend and make it in simpler terms for his
clients before its requested by the client

Challenges Faced by
Investment Banks
1 Not making enough money.
Investment banks are not able to generate high revenues as of
now in the market. The expected reruns are not at par, therefore
there is low money returns are not good enough.

16. Consumer expectations.

One of the biggest problems is consumers expectation. Many
consumers have expectation of high returns for lower risk which is
creating pressure for the banks as they are unable to deliver on
consumers terms

29
 17. Increasing competition from financial
technology companies.
Technology is now creating problems for banking systems. With
the help of this financial technology companies, it is easier for
consumers to avail various financial services. This act like a
substitute to conventional banking system as it is not easy to adapt
and adjust to this techno savvy market for them.

18. Regulatory pressure.

Regulatory requirements continue to increase, and banks need
to spend a large part of their discretionary budget on being
compliant, and on building systems and processes to keep up with
the escalating requirements.

Role of Investment Banking in

Economy

Investors
Financial (Generate
Economy Savings)
Real Economy
Banks & Financial
Investments Real estate,
Investment gold, etc.
Institution
Capital Markets/ Bankers
Money Markets
Foreign exchange Production
Market of Goods &
Commodity Business
Services 30
Futures Markets Activity
(Real Economy)
 Investors are people who have surplus money which they want
to increase so they give it to investment bankers. Now the
investment bankers utilize this money and invest by giving it to
various markets for business activities like merger & acquisition, IPO
etc. this leads to growth of company and better service and quality
of products availed within country reducing the pressure of imports.
Also it generates higher revenues which are circulated among the
country. The investors will not only earn returns, capital
appreciation etc. but also they will utilize the goods and services
produced by the users of the deployed funds. This will in return
create satisfaction in the minds of consumer/investor and will also
earn profits for the user of the funds because of utilization of
goods and services.

Scope of Investment Banking in

India
Investment banks helps in expansion and growth of business in
country. It acts as an intermediary between listed corporation
and share applicants,

31
 Investment banks also helps company in IPO by advising and
handling the documentation for the same. This help many
companies go public and gain more funds for diversification
and expansion.

The government of India is promotion Make in India movement.

This encourages many new startups and many new firms to
start in the country. Therefore, there will be soon high
requirement for funds in country which will give rise in demand
of more investment banks in country.

India is developing country and one of major industrial

attraction in world. There is huge potential in country to grow
its business unit and expands them to new height.

The need for getting extra funds to growing business is in

demand as well as advices from professional regarding huge
fund management for an organization have risen over the
years.

Investment banks also act as underwriters and provide several

underwriting services, both in the case of the initial public offer
and follow on public offer in case the minimum public
subscription does reach the desired level which has been
mentioned according to the rules stipulated by the SEBI.

Investment bankers are in high demand in Primary Markets,

Capital markets, and the Stock exchanges, as the no. of people
and organizations have increased greatly in past one decade.

32
Investment Banking v/s Wealth
Management
Sr Investment Banking Wealth Management
No.
1. An investment banker The field of wealth
mainly offers financial management is concerned
services and advice to with providing financial
corporate entities services primarily for high-net-
worth individuals and ultra-
high-net-worth individuals.

2. The investment bankers Wealth management refers

excel at the financial simply to money
management of businesses management, in all its
and persuasively aspects.
negotiating complex
multibillion-dollar deals.

3. In terms of the actual The job of providing these

functions within investment services to a firm's clients is
banking and the job typically split between
responsibilities of relationship managers and
investment bankers, there investment professionals.
are two types of investment
banker positions: account
managers and operations
specialists.

4. They manage the M&A and They manage alternatives like

business restructuring i.e. equity, mutual funds,
spinoffs, stock splits, share insurance, real estate funds,
buybacks, IPO etc. structured products, etc.

5. Investment Bankers get Wealth managers charge fees

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 commission for each for their consulting from
successful deal made by individuals.
them.

Top 10 Investment Banks in

India
COMPANIES INVESTMENT
SERVICE OFFERED
1 JP MORGAN Security Management
CHASE Services
Brokerage Dealings
Global Market Approach
Stocks, Bonds Investment
Strategy
Consulting Programs
Portfolio Management

19. GOLDMAN Mergers and Acquisition

SACHS Consultant
Financing Support
Advisory Guidance
Equity and Debt Financing
Risk Management

20. BANK OF Online Investing

AMERICA Streamlined
MERRILL LYNCH Registered Broker Dealing
Equity and Debt Capital
Market

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 Investment Advisory
Management
Convenience Supportive
Services
21. MORGAN Asset Management
Prime Brokerage Facility
STANLEY:
Commercial Banking
Retail Brokerage Dealings
Investment Management
Wealth Management

22. CITIGROUP: Consumer Banking

Global Wealth
Management
Financial Analysis
Convenient Investment
Terms

23. DEUTSCHE Financial assistance

Clearing and Settlement
BANK:
Security Management
Asset and Wealth
Management
Trade, Finance Services

24. CREDIT Asset Management

Global Trade Services
SUISSE:
Execution
Brokerage Dealings

25. BARCLAYS Wealth Management

Commercial Banking
CAPITAL:
Investment Management

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 Financial Services

26. UBS Advisory Consultancy

Asset Management
Leveraged Finance
Brokerage Dealings

27. WELL FARGO: Brokerage Services

Risk Management
Asset Management
Investment Management
Wells Fargo Securities
Cross Selling

Webliography
www.investopedia.com

www.wallstreetprep.com

36
 economictimes.indiatimes.com

www.coolexample.in

www.digitalistmag.com

www.ibhacker.com

www.academia.edu

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