Investment Banking - Opportunities for Chartered Accountants

December 2010

Programme Agenda

Session 1 Session 2 Session 3 Session 4 Session 5

Role of Investment Banking in Business Finance Investment Banking Boom Functional Scope of Investment Banking Professional Skill-set for Investment Banking Opportunities for CAs in Investment Banking

Session 2 Investment Banking in Business Finance

CA Raghunath A Founder & MD, akasam consulting private limited

Has over 18 years of experience in investment banking Key focus areas are Private Equity syndication, M&A Advisory and Capital Markets Advisory Distinguished guest faculty at several eminent institutions like JNIDB , IPE and other industry forums He is a fellow member of the Institute of Chartered Accountants of India and an associate member of the Institute of Cost & Works Accountants of India A tennis enthusiast , a person with never say NO attitude and strong will power

Business Life Cycle

Business Roadmap
Market Dominance Growth Consolidation Market Acceptance Stabilisation Decline/ Repositioning

Inception

Globalization Impact on Business

Positives
Access to International Markets Market Economy Faith on Private Capital Movement of Capital

Negatives
Economic Interdependency Global Conflicts, trade disputes & culture disputes Sharing business to empower own economies

Finance as Integral Business Input

Business Finance

Business Finance

Strategic

Operational

Debt Equity Mix

Wealth Optimisation

Raising Equity

Raising Debt

Scope of Business Finance

Estimating Fund Requirement Determining the Capital Structure Selection of Source of Finance

Business Finance

Capital Rationing Decisions Cash Management Surplus Allocation and Management Financial Control

Business Finance Professional Skill set

Strong analytical and mathematical skills Good inter personal skills To have project and time management skills Knowledge on various capital structures, to suggest suitable capital structure Communication and networking skills Maintaining relationships with investment community Up-to-date knowledge on various sectors

Role of Investment Banker

Estimating Fund Requirement Determining Capital Structure Selection of Source of Finance Capital Rationing Decisions Cash Management Surplus Allocation and Management Financial Control In the context of each of these functions

Session - 4 Investment Banking Functional Scope

CA Harsha Vardhan M Associate - Debt, akasam consulting private limited

Has 4 years of experience in corporate finance advisory services Handles debt syndication and has worked on a number of funding transactions for businesses in diverse sectors. His areas of focus include telecom, infrastructure and manufacturing sectors. Is an Associate Member of the Institute of Chartered Accountants of India and also an Associate Member of the Institute of Cost & Works Accountants of India A movie buff and enthused about analyzing stock markets

Praveen M Associate - Equity, akasam consulting private limited

Has 4 years of experience in the financial services industry with special focus on Equity Syndication and Equity Research. Has handled several large and complex engagements in Private Equity Syndication A Graduate in Commerce and a budding Chartered Accountant When not responding to mails, selling ideas and working deals, Praveen goes out on adventure trips and loves listening to music

Core Investment Banking Functions

Core IB Functions

Traditional IB Activities

Ancillary Activities

Research Raising Capital Corporate Advisory Sales & Trading

Debt

M&A Advisory

Equity

Restructuring Advisory

Others

Raising Capital
Investment bankers are the intermediaries between users of capital and providers of capital. Capital can be

Debt

Equity

Banks & FIs

Capital Market

Private Equity

Raising Capital - Debt

How? Funding Types Debt

Is an amount owed to a person/organization for funds borrowed.

Fund Based

Project Finance Working Capital Acquisition Restructure

Term Loan Working Capital

Non-Fund Based

Letter of Credit Bank Guarantee

Raising Capital Debt Scope of Services

Disbursement Negotiations Answers to Queries raised Sharing Information Client Funding Agency Meet Liaison with Funding Agency Identifying the Funding Agency Identifying the Product Business Mapping

Raising Capital Capital Markets

Fund Raising in Capital Markets
Debt Issue of Debentures Issue of Corporate Bonds Issue of Money Market Bonds Issue of Government Bonds Equity Initial Public Offering (IPO) Follow on Public Offering (FPO) Private Placements Preferential Allotments Rights Issue Hybrid Convertible Preference Shares Convertible Debentures Convertible Bonds

Fund raising in capital markets can be through any of the above modes Issue of each of the instruments require separate and elaborate procedure to be followed Investment Banker has the requisite skill set and infrastructure to mobilize and complete the transactions

Raising Capital Private Equity

Private Equity consists of investors and funds that make investments directly into private companies. Contribution of capital towards equity

Characteristics of Private Equity:

What is PE

Unsecured in nature Dilution of promoters stake Incisive evaluation of company Management participation Higher cost of capital

Raising Capital Private Equity

Why PE?

Growth catalysts Facilitating evolution Strategic intelligence organizational

Funding Types
Angel Funding Early Stage Funding Growth Equity Late Stage Funding PIPE Deals Buyout Equity

inputs/market

Helping build process /systems to ensure longevity and robustness Improving governance Corporate

How

Adding to the organizational financial acumen.

Private Equity - Transaction Flow

Deal Structuring and Documentation Due Diligence Deal Negotiation & Term sheet finalization Sharing of Information

Identification of PE Funds Strategy Formulation & Crystallizing Requirement Business Mapping

Private Equity - Evaluation Framework

Exit Route Industry & Space

Business Model

Companys positioning, strategy & differentiation

4
Competitive Landscape

Promoter & Management Team

Corporate Advisory
Corporate Advisory Services to assist management in decision making

M&A Advisory Identification of opportunities and counterparties, both strategic and financial.

Restructuring Advisory Advising and Implementing Solutions for recovery and repositioning of a corporate.

Meaning

Seek to eliminate a competitor Increase efficiency

Change of ownership ownership structure Merger / Demerger

or

Rationale

Diversify its products, services and geographical market Reduce tax effect Market Dominance

Response to a crisis or major change in the business Debt restructuring.

M&A Advisory Transaction Flow

Integration Planning Co ordination Documentation Deal Structuring

Due Diligence

Determination of Value

Quantification of Synergies

Solicitation of Target

Identification of Target

Session 4 Professional Skill-set for Investment Banking

Vijay Grover Associate - Equity, akasam consulting private limited

Has over 2 years of experience in corporate finance advisory services Handles client advisory on issues of business strategy, private equity and providing commercial due diligence support to investors assessing opportunities. Prior to akasam, he was a manager in ING Vysya Bank for 3 years A Post Graduate in Commerce from Osmania University, a silver medalist Management Graduate in Finance from the ICFAI Business School and also a Certified Associate from the Indian Institute of Banking and Finance In his spare time, he likes reading, tracking the stock markets and partying hard

Keys to Success as an IB Associate

Goals Develop credibility early with team Effective Leadership and authority delegation. Time management & multiple tasking skills Understand, summarize and transaction (both up and down) communicate Pit falls Presenting materials with mistakes or typos Waiting to get involved Failure to anticipate Not leveraging firms resources appropriately Getting lost in the detail and missing the big picture Insubstantial interaction with clients Does not properly delegate work Losing confidence under pressure Lack of attention to detail Lack of follow through Lack of involvement in recruiting and training activities

Develop a rapport with the analysts and communicate the big picture Manage expectations responsibilities Get your hands dirty Dont be afraid to ask questions Proactive client interaction Educate the team and exceed expectations and define

Skill-set of Investment Banker

Strong analytical and mathematical skills Good knowledge of the business world and latest market developments Ability to keep calm and work under pressure Attention to detail Project and time management skills IT competency Good inter-personal skills Tolerance for taking risks Ability to work in a team environment Ability to demonstrate effective leadership Ability to take initiative, good networking skills Good oral and written communications skills Adapt to different situations and cultures of different countries.

Session 5 Opportunities for CAs in Investment Banking

CA Raghunath A Founder & MD, akasam consulting private limited

Has over 18 years of experience in investment banking Key focus areas are Private Equity syndication, M&A Advisory and Capital Markets Advisory Distinguished guest faculty at several eminent institutions like JNIDB , IPE and other industry forums He is a fellow member of the Institute of Chartered Accountants of India and an associate member of the Institute of Cost & Works Accountants of India A tennis enthusiast , a person with never say NO attitude and strong will power

Professional Skill-set of CA

Accounting

Costing
Management Accounting

Auditing

Taxation

Business Laws

Traits of CA as Result of Academics

Conceptual Approach Ability to Inter Relate Ability of Analysis of Financial Statements Commitment & Hardwork Working under Pressure Due Diligence Skill Risk Assessment Skill

Finance Professionals in Investment Banking

CAs

CFAs

Investment Banking

MBAs

Others

Skills to Back up

Ability to Communicate Ability to Understand Business Ability to take Initiative Ability to Communicate Willingness to Travel

Investment Banking Space

IB World

Investment Banks

Investment Funds

Top League

Mid Market

Small Boutique

PE Funds

Buyout Funds

VC/Angel Funds

Proprietary Funds

Mutual/Pension Funds

Hedge Funds

Proprietary Funds

Thank You