INTRODUCTION

The primary role of investment bankers is to serve as financial advisers to

corporations, governments, and other large institutions. Investment bank help underwrite
a number of securities for corporations including common and preferred stock, corporate
bonds, government and federal agency securities and others. Investment banks were
essentially created in the U.S. by the passage of the Glass-Steagall Act. Prior to this,
investment banking activities were part of large, money-centre commercial banks.
Investment banks help companies and governments and their agencies to raise money by
issuing and selling securities in the primary market. They 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. Investment banks in India are itself an institution which generates funds in
two different ways. The first manner in which it works is by drawing public funds via the
capital market by way of selling stock in their company. The other way in which it
operates is to seek for venture capital or private equity, as a substitute for a stake in their
company.
An individual or institution which acts as an underwriter or agent for corporations and
municipalities issuing securities. Most also maintain broker/dealer operations, maintain
markets for previously issued securities, and offer advisory services to investors.
Investment banks also have a large role in facilitating mergers and acquisitions, private
equity placements and corporate restructuring. Unlike traditional banks, investment banks
do not accept deposits from and provide loans to individuals. Also called investment
banker. The major work of investment banks includes a lot of consulting. For instance,
they offer advices on mergers and acquisitions to companies.
The role that an investment bank plays sometimes gets overlapped with that of a private
brokerage house. The usual advice of buying and selling is also given by investment
banks. There is no demarcating line between the investment banking and other forms of
banking in India. This has been observed majorly of late. All banks nowadays want to
provide their customers the best of services and create a niche for themselves and that is
why apart from investment banks, all other banks too are aiming at making it big.

Financial institution that assists individuals, corporations and governments.

In addition, they can provide a number of services including advising clients regarding
acquisitions and mergers, creating and trading in derivatives, brokering loan sales, setting
up special purpose entities, stock and bond trading, currency and commodity trading,
issuing credit and liquidity enhancements and developing business plans so companies
can expand into new markets.

Assists companies in mergers & acquisitions

Investment banks do not take deposits.

Informative barrier which separates, the two to prevent information.

The private areas & the public areas(types of IB).

Emerged In Early 16th Century

18th Century

Emerged In Us During American Civil War

Birth Of Famous J.P. Morgan, Goldman SachS

19th Century Saw Prominent Banking Partnerships

20th Century, Dramatic Expansion

IN INDIA:o
o
o
o
o
o

Emerged In The 19th Century

Early 20th Century Witnessed,
Agency Houses
1967, ANZ GRINDLAYS, Citibank
1972, SBI, ICICI
1973, JM FINANCE

What Is An Investment Bank?

The Glass- Steagall Act prohibited commercial banks from offering investment bank
services for primary two reasons. One, the bank could force a customer seeking a loan to
buy the securities that they were trying to sell as a condition for getting a loan, and
second, the bank would be exposed to increased risk due to the volatile and cyclical
behavior of IB activity. U.S banks were not able to compete for underwriting business
with foreign banking firms who in turn captured U.S. customers.
IB services complement traditional lending services allowing commercial banking firms
to offer both conventional loans and security underwriting to customers who seek to
raise new funds. In addition, there are economies in information gathering about clients.
On the other hand, IB services are highly sensitive to fluctuations in the economy and
would increase the risk exposure of the commercial bank.
Investment products include stocks, bonds, mutual funds and other non -deposit services.
The two most popular investment products offered include mutual funds and annuities.
The potential advantages include generating considerable fee income which may be less
sensitive to interest rate movements than traditional services such as loans and deposits.
In addition, it is possible that it might add prestige and may help position the institution
well for the future as more and more individuals start planning for retirement.

IT PERFORMS FOLLOWING FUNCTIONS:-

HISTORY OF INVESTMENT BANKING

Undoubtedly, investment banking as an industry in the United States has come a long way
since its beginnings. Below is a brief review of the history

1896-1929
Prior to the great depression, investment banking was in its golden era, with the industry
in a prolonged bull market. JP Morgan and National City Bank were the market leaders,
often stepping in to influence and sustain the financial system. JP Morgan (the man)
is personally credited with saving the country from a calamitous panic in 1907. Excess
market speculation, especially by banks using Federal Reserve loans to bolster the
markets, resulted in the market crash of 1929, sparking the great depression.

1929-1970
During the Great Depression, the nations banking system was in shambles, with 40% of
banks either failing or forced to merge. The Glass-Steagall Act (or more specifically, the
Bank Act of 1933) was enacted by the government with the intent of rehabilitating the
banking industry by erecting a wall between commercial banking and investment
banking. Additionally, the government sought to provide the separation between
investment bankers and brokerage services in order to avoid the conflict of interest
between the desire to win investment banking business and duty to provide fair and
objective brokerage services (i.e., to prevent the temptation by an investment bank to
knowingly peddle a client companys overvalued securities to the investing public in
order to ensure that the client company uses the investment bank for its future
underwriting and advisory needs). The regulations against such behavior became known
as the Chinese Wall.
1970-1980
In light of the repeal of negotiated rates in 1975, trading commissions collapsed and
trading profitability declined. Research-focused boutiques were squeezed out and the
trend of an integrated investment bank, providing sales, trading, research, and investment
banking under one roof began to take root. In the late 70s and early 80s saw the rise of a

number of financial products such as derivatives, high yield an structured products, which
provided lucrative returns for investment banks. Also in the late 1970s, the facilitation of
corporate mergers was being hailed as the last gold mine by investment bankers who
assumed that Glass- Steagall would someday collapse and lead to a securities business
overrun by commercial banks. Eventually, Glass- Steagall did crumble, but not until
1999. And the results werent nearly as disastrous as once speculated.

1980-2007
In the 1980s, investment bankers had shed their stodgy image. In its place was a
reputation for power and flair, which was enhanced by a torrent of mega-deals during
wildly prosperous times. The exploits of investment bankers lived large even in the
popular media, where author Tom Wolfe in Bonfire of the Vanities and movie-maker
Oliver Stone in Wall Street focused on investment banking for their social commentary.
Finally, as the 1990s wound down, an IPO boom dominated the perception of investment
bankers. In 1999, an eye-popping 548 IPO deals were done among the most ever in a
single year with most going public in the internet sector. The enactment of the GrammLeach-Bliley Act (GLBA) in November 1999 effectively repealed the long-standing
prohibitions on the mixing of banking with securities or insurance businesses under the
Glass-Steagall Act and thus permitted broad banking. Since the barriers that separated
banking from other financial activities had been crumbling for some time, GLBA is better
viewed as ratifying, rather than revolutionizing, the practice of banking.

Investment Banking After the 2008 Financial Crisis

The greatest global financial crisis since the Great Depression was triggered in 2008 by
multiple factors including the collapse of the subprime mortgage market, poor
underwriting practices, overly complex financial instruments, as well as deregulation,
poor regulation, and in some cases a complete lack of regulation.

Perhaps the

most substantial piece of legislation that emerged from the crisis is the Dodd-Frank Act, a
bill that sought to improve the regulatory blind spots that contributed 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. Such entities raise capital and invest much like banks but escaped regulation
which enabled them to over-leverage and exacerbated system-wide contagion. The jury is

still out on Dodd-Franks efficacy, and the Act has been heavily criticized by both those
who argue for more regulation and those who believe it will stifle growth.
Investment banks like Goldman converted to BHCs
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) get
government bailout money. The flip-side is that the BHC states 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. Although the official scorecard isnt in, based on press releases from the
largest financial institutions, 2011 will see 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 through something pretty significant post-crisis. Many banks had neardeath 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.

FEATURES

1. Raising Capital & Security Underwriting. Banks are middlemen between a

company that wants to issue new securities and the buying public.
2. Mergers & Acquisitions. Banks advise buyers and sellers on business valuation,
negotiation, pricing and structuring of transactions, as well as procedure and
implementation.
3. Sales & Trading and Equity Research. Banks match up buyers and sellers as
well as buy and sell securities out of their own account to facilitate the trading of
securities
4. Retail and Commercial Banking. After the repeal of Glass-Steagall in 1999,
investment banks now offer traditionally off-limits services like commercial
banking.
5. Front office v/s back office. While the sexier functions like M&A advisory are
front office, other functions like risk management, financial control, corporate
treasury, corporate strategy, compliance, operations and technology are critical
back office functions.
6. History of the industry. The industry has changed dramatically since John
Pierpont Morgan had to personally bail out the United States from the Panic of
1907. We survey the important evolution in this section.
7. Due diligence.When investment banks advise a buyer (acquirer) on a potential
acquisition, they also often help to perform whats called due diligence to
minimize risk and exposure to an acquiring company, and focuses on a targets
true financial picture. Due diligence basically involves gathering, analyzing and
interpreting the targets financial information, analyzing historical and projected
financial results, evaluating potential synergies and assessing operations to
identify opportunities and areas of concern. Thorough due diligence enhances the
probability of success by providing risk-based investigative analysis and other
intelligence that helps a buyer identify risks and benefits throughout the
transaction.

NEED OF INVESTMENT BANKING

1) First stock market in Antwerp Belgium in 1531 sans the stock!!

2) Limited liabilities companies came into existence in the 1600s to sponsor trade voyages
to the East Indies from countries such as Britain, France etc.
3) Investors spread their risk by investing in several different ventures at the same time,
thereby playing the odds against all of them ending in disaster.
4) This kind of business model led to risk management .
5) Dutch East India Company was the 1st to allow outside investors to purchase shares.
6) Share trading at the Jonathan coffee shop in London.
7) Investors who wished to buy or sell securities posted the details at the coffee shop and the
trade happened.
8) A formal stock exchange was built in 1773.
9) NYSE came around 19 years later.
10) Investment banking is a particular banking system that allows customers to invest their
money directly or indirectly and also helps companies, government and individual raise
fund by means of bond selling, security sales, mergers and acquisitions and issuing of
IPO. Investment banking gives both the learned and the novice in the investment industry
the opportunity to maximize better dividend of their business or property by way of
mergers and acquisitions.

Investment banking Online

Investment banking helps to boost the economy of the commercial sections of the society
in other words they create more opportunity for both the employed and unemployed ones
to raise capital and make profit.
They also help boost the financial security of a country from possible financial drop
down. Every economy that wants to have a growing financial status must require the
services of an investment banking.

Duties, Services And Functions Of Investment Banking

The investment bank is a financial institution that helps corporate organizations, company
and individual persons to raise enough capital to invest in their projects. Investment
banking is all about money and security trading, turning the paper works into real money.
They also helps to advice you on the proper kind of investment to invest your money into
at the right time, in other words they give professional advice on when to issue a sell or
buy request for stocks, bonds and securities, or better still invest the money for you if
given the veto power.
Investment banking services
These are some of the services of an investment bank in the investment industry;
1. Invest your money: Unlike the commercial banks that helps you to invest your money
directly where you deposit and withdraw money; the investment banks indirectly helps
you invest your money in a chosen market, though this may not be done directly but you
would surely get a maximum returns on your securities. After Gramm-Leach-Bliley Act
in 1999, the investment bank and commercial bank in the US can be incorporated thereby
giving them more rooms for many services. Though the major duties of the investment
bank is to offer viable and reliable advice on how to invest your money properly, buying
and selling of acquisitions and trading on stocks and bonds.
2. Sales of company stocks: Another duty of investment banking is the sales of company
shares and bond in order to raise funds and capital for government, corporations,
companies and individuals. This is to aid the corporation to raise enough capital funds for
the executions of projects and acquire more property for business.
3. Buy securities: They also help corporate bodies to buy shares which they believe have
a good value and have a ready and standby buyer whom would make a higher bargain.
They act more or less like the stock broker when it comes to buying and selling of shares.
These securities when traded could help the company in raising more capital.
4. Managing assets and investment portfolios: Investment banking also helps to
manage your assets. As a corporate body or even a business man, you need the services of
an investment bank to help you in the management of your assets, properties and finance.

In a growing business where more of the finance comes from either the public or banks,
there is a higher need of an investment banks to do the proper management of both the
assets and finance.
5. Offer good financial advice: One of the functions of a good investment banker is to
offer a good and profitable financial advice to clients. This professional advice requires
proper research on when to issue shares to the public in order to raise funds, when not to
issue public shares and also when to acquire a merger. All these and more are the
professional duties of an investment banker. Though there is no 100% assurance that with
an investment bank you would get the best deal, but they would actually help to aid you
in getting a better and fairer deal especially on merger acquisitions.

PROS & CONS

Pros:Responsibility early: Analysts can be given lots of responsibility early on in their
career.
Salary: Attractive salary at the outset with bonus earning potential later on.
Training: the programs offered by the Wall Street Banks are very thorough & give
analysts an excellent foundation in finance as well as valuable hands on experience. On
the-job training gives you exposure to some of the most interesting

& dynamic

transactions on Wall Street.

Steep learning curve: Learning is intense & analysts will be working with some of the
brightest & most demanding people on Wall Street. The knowledge you will build in
Corporate Financial analysis looks very good on any resume.
Skill development: you will develop a broad set of skills from analytical to oral,
written & interpersonal.
Team Work: The industry doesnt survive without it! Working in a team environment
where everyone is focused & professional can be very rewarding.
Career foundation: Gives you a solid basis to develop & continue a career in finance
possibly moving into Private Equity or Venture Capital in the future. (Typically analysts
are head hunted by PE or VC firms at the end of their 2 year stint). Exit opportunities are
attractive. Some even move into the entrepreneurial arena where their financial
knowledge is extremely valuable.

Cons: Hours: Without question one of the biggest drawbacks are the hours that Investment
Bankers work. It is not unusual to be expected to work through the night when deal flow
is high. Working weekends is also common when deals are close to being struck. The
markets might be closed but the Investment Bank is open 24/7. Analysts should be
prepared to have to cancel personal plans at very short notice.
Love the cube: Much of the day is spent in a cube for hours poring over financial
statements & churning out spreadsheets & presentations. Early on there are very few
chances to get out of the office or even attend clients meetings.
Low Tolerance for Errors: Analysts must be able to learn quickly & always work to a
very high standard from day one, paying very close attention to detail.
Strong Personalities: Analysts will be working with many different & very strong
personalities. The industry is intensely competitive & people are profit hungry by nature.
This in turn creates a very high pressure environment.
The non-glamorous work: Analysts will often be asked to complete tasks which
arent glamorous like photocopying, booking meeting rooms, organizing client dinners
The2-Year itch: It is generally expected that analysts will move onto a new firm or
career after the first 2 years

FUNCTIONS

FRONT OFFICE
Pitching to various clients and institutions
Setting the terms and conditions for any form of deal
Trading of securities on behalf of clients
In the process of market making, traders will buy and sell financial products with the
goal of making an incremental amount of money on each trade.

Sales desks communicate their clients' orders to the appropriate trading desks, which

can price and execute trades, or structure new products that fit a specific need.
Research is the division which reviews companies and writes reports about their
prospects, often with "buy" or "sell" ratings.
Structuring has been a relatively recent division as derivatives have come into play,
which involves creating complex structured products which typically offer much greater
margins and returns than underlying cash securities.

 Markets Include The Following:

Sales & Trading
Traders Buy and Sell Securities or Financial Products.
Calling on Institutional and High-net-worth Investors to suggest trading ideas and take
orders.
Research
Reviews Companies and Makes Reports about Their Prospects, Often With "Buy" Or
"Sell" Ratings.
May Or May Not Generate Revenue.
Helps In Assisting Traders In Trading, Sales Force In Suggesting.

MIDDLE OFFICE

Middle office usually consists of traders, analysts, and managers who are knowledgeable
of trading activities but usually dont engage in market activities themselves. ( Chinese

Wall Policy)
Risk Management involves
Analyzing the market and credit risk that traders are taking onto the balance sheet in

conducting their daily trades,

Setting limits on the amount of capital that they are able to trade in order to prevent 'bad'

trades having a detrimental effect to a desk overall.

Another key Middle Office role is to ensure that the above mentioned economic risks are
captured accurately (as per agreement of commercial terms with the client) correctly and

on time (typically within 30 minutes of trade execution).

It Focus On Identifying And Managing The Level Of Risk That The Company Assumes

In Order To Do Business.
This Requires Not Only Assessing Risk In Terms Of Purchasing Investments, But Also
Working With The Front Office To Identify The Risk Of Doing Business With Certain

Clients.
The Middle Office Relies Heavily On Data Collected By The Back Office In Terms Of
Profits And Losses, And The Underlying Reasons For Those Activities.

BACK OFFICE

It is an important link between finance producing department and its clients.

An operation involves data-checking trades that have been conducted, ensuring that they

are not erroneous, and transacting the required transfers.

Every major investment bank has considerable amounts of in-house software, created by
the Technology team, who are also responsible for Computer and Telecommunicationsbased support.

Front End Process (IPO)

1. Company asks for bids

2. Selecting lead managers as per bids
3. Prepare draft offer prospectus document for IPO.
4. Road shows for the IPO
5. Decide the issue date & issue price band with the help of Issuer Company
6. RHP & IPO Application Forms are printed and posted to syndicate members; through
which they are distributed to investors
7. Investor Bidding for the public issue
8. Allocation of shares as per demand
9. Stocks listed on the market

Lead managers, also known as Book Running Lead Manager and Co Book Running
Lead Managers.
Registrars.
Legal advisors.
Auditors.
SEBI.
Credit rating agencies.
Syndicate members.( generally banks )
Investors (Retail Individual Investor (RII), High Net worth Individual (HNI), Noninstitutional bidders, Qualified Institutional Bidders (QIB's).)
Advertising agencies.

Appoints registrar of the issue.

Appoints syndicate members.

Back-end process of an IPO

1) Issuer Company - IPO Process Initialization

Appoints lead manager as book runner.
2) Lead Manager's - Pre Issue Role
3) SEBI Prospectus Review
SEBI reviews draft offer prospectus.
Reverts it back to Lead Manager if needs clarification or changes.
4) Preparation of Red Herring prospectus
5) Investor Bidding for the public issue
6) Lead Manager Price Fixing
7) Registrar - Processing IPO Applications
8) Lead manager Stock Listing

MARKETING OF IPO
Press Conference
Investors Conference
The prospective investors are called by invitation. The Promoters and Lead Managers
give presentations. They reply to the questions of the investors to boost their
confidence. HNI are called. Top brokers are also called.

Road Shows
Road shows are becoming more and more popular in India.

Newspaper Advertisements.
Printing Prospectus.
The company has to print approved prospectus and provide enough copies to all
intermediaries. If any investor asks for a copy of prospectus it must be provided to
him without any fees. Sufficient quantities should be maintained at the registered
office of the company and with the Lead Managers.
Printing Application Forms
Sufficient number of application forms must be printed much before the opening of

the issue. Each form must contain abridged prospectus in SEBI approved format. It is
compulsory to provide stationery to all underwriters and brokers. They will arrange
distribution to their sub- brokers and other clients
The reputation of a merchant banker could expand a firms investor base at a lower
cost than the firm can, since the promotional efforts of a merchant banker on behalf of
the firm would be more creditable

Fees taken at diff stages of an IPO

Networking and Promotions

Customer Relationship Managers building the trust

Networking via already existing clients
Pitching by interaction with the CEOs and CFOs of companies
Hiring people from other firms with strong network and good customer relationships
Holding roadshows
Holding seminars to attract investors
Structured products and services to attract customers. E.g. ICICIdirect money

 Front End
IB is still at a very nascent stage in India and hence needs to be developed and
promoted properly.
The trust factor is still not been built up amongst the companies and investors. Here
there is need of trained analysts to do the same.
Still concentrated only on the metros. Need to move to the tier-2 and tier-3 cities to
tap in more potential investors.

Back End
Need to develop more robust risk management systems.
Use of better technology and systems required for 2 main purposes
1. To keep track of an investors database better
2. Bring in faster and more intelligent systems

SCOPE

1. The Dictionary of Banking and Finance defines Investment Bank as a term

used in the US to mean a bank which deals with the underwriting of new issues
and advises corporations on their financial affairs. The equivalent term in UK for
such function is Issue House.
2. A broader definition is provided by Bloomberg which defines an investment bank
as a financial intermediary that performs a variety of services including aiding in
the sale of securities, facilitating mergers and other corporate reorganizations,
acting as brokers to both individual and institutional clients and trading for its own
account.
3. Investment Banking has grown to encompass an important place in the field of
financial services in India in the liberalized era.
4. This field of financial services can become more important in the years to come.
The ever-increasing sophistication and deepening of the financial markets on the
one hand, and the fast transforming corporate landscape from a protective
background to a globalized market place on the other, would lead to more
complex corporate transactions and thus, the role of investment bankers as
transaction experts and advisers would become indispensible.
5.

There is the utmost need at this point of time for organized learning of this field
of financial activity through a systematic approach based on conceptual clarity.

6.

At the same time, complexity in transaction leads to the need for more regulation
and would thus make the learning process difficult.

7. The coverage on difficult topics such as takeovers, restructuring and project

advisory has to be handled in a well-structured manner to make it easily
understandable to others.
8.

The pace at which Indian Corporate landscape is transforming leaves no doubt

that investment banking would grow into a larger service area in future.

9.

Indian Corporate are steadily grappling with the globalized realities and coming
out successful in various sectors .

10. Cross border capital flows are becoming an imperative capital raising
consolidation and restructuring are the orders of the day.
11. The lawmakers and regulators are constantly engaged in providing the necessary
bandwidth by enactment and amendment of corporate and securities laws and
refining the statutory framework through periodical changes in guidelines, rules
and regulations.
12. The Indian Financial markets have been through a continuous process of historic
transformation ever since economic liberalization set in 1991.
13. In Particular, the capital market has seen such landmark systematic changes that
today and it ranks on par with the most developed markets in the world in terms of
infrastructure and processes.
14. From its small beginnings in the seventies and eighties, investment banking
unfolded itself as a full-fledged service industry during this phase.
15. From mere public floatation services such as issue management and underwriting,
the investment banking industry has evolved to encompass many high profile
corporate actions.
16. Investment banking as a subject of study introspects the conceptual issues
underlying the various aspects of investment banking and analyses them in depth
with an analytical perspective.
17. The evolution and development of capital markets, its structure and constituents,
law and regulatory mechanisms are covered in it.
18. Underwriting, issue management, private equity, buybacks, delisting, corporate
restructuring, mergers, acquisitions come within its purview.
19. Corporate Valuation, asset management, securities business and wealth
management, mutual funds, private equity funds, hedge funds to name some also
fall within the ambit of the subject of study of Investment Banking.

PRESENT SCENARIO

The investment scenario in India is getting better and better with each passing
day due to high confidence level of the investors. Today, India is considered the 4th
biggest economy in the world. Its impressive GDP rate, especially in the field of
purchasing power, has catapulted it to second position among all the developing nations.
Be overcome an increase in the enrollment figures is being constantly
witnessed. But, when it comes to cumulative states expenditure, the scene is quite
gloomy. For the period 2007-08, a fall of about 18% has been seen in the total
expenditure. Further, a clear gap in the per capita education Emerging strong even during
the scariest phase of global financial meltdown, India has become one of the favorite
investment destinations for the foreign investors across the globe.
According to forecasts, Indian economy will grow to become 60% in size of
the economy of US. It will also witness macro-level stability in economic conditions.
Behind all this, investment can be said to be the key player. To know investment
environment in India in the best possible way, it will be wise to consider the performance
of 3 core sectors including education, infrastructure and security.
Private Education Investment:
Since Independence, Indian education scene has improved for the better. As against 0.1
Million enrollment in 1947, India experienced over 11 Million enrollments in 2005-06. At
present, the educational sector has become more attractive with its growing enrollment
rates and the credit for this can be given to the whole fresh team of education providers,
consisting of distance learning course providers, private institutes, foreign education
providers and public institutions.
Though the Foreign Direct Investment (FDI) in educational sector, comprising higher
education, has been allowed by the Indian government, there are still many shortfalls that
need to expenditure among the states can also be seen. Per capita fund inflow to
educational sector in Uttar Pradesh stood at ` 483 whereas in Bihar it was ` 487 in 200506. Himachal Pradesh has ` 1777 and Maharashtra and Kerala show ` 1034 per capita
fund flow. Despite good financial performance of many of the states, their spending
scenario in educational sector has been found in poor condition.

Infrastructure Investment:
Investment scenario in India in infrastructure sector is attractive. Many sectors have been
allowed to receive private investment, which is truly a turning point. In past few years,
many road projects have been launched under National Highway Development
Programme. The project costing neared about US$ 12 billion. In this, the foreign
construction companies have also been invited to take part. Telecom sector and power
reforms have also experienced massive improvement. Telecom and Oil and Gas sector are
seeing disinvestments processes. Government is also thinking of introducing a more
integrated transport system with chalking out plans for the investment.
It cannot be denied that India has been successful in launching plenty of infrastructure
projects with encouraging private participation in the sector. The booming IT and BPO
sectors of India are the absolute testimony to its success story in the infrastructure
projects.
The overall outlook of the roads and highways in India has also changed for the better.
Many cities and towns have been inter-connected to each other. Both state and central
governments have dished out significant amount to the development of highways.
Security Investment:
Security investment scenario in India is also bright. While several industries in India are
grappling with the impact of global meltdown and recent Mumbai attacks by terrorists,
the one industry which is predicted to register profits in near future is the Indian security
industry. The private security business in India is expected to become ` 50,000 crore (`500
billion) worth industry.
Current Investment Scenario in India
Globalization and Foreign Direct Investment form an integral part of all the developed as
well as developing economies. In fact, the growth of theunderdeveloped economies is
also dependant on these key factors. These components equip any nation with new skills,
new items and provide smooth access to markets and technology. Today, every nation
across the globe is looking for foreign and overseas investors. Whether it's India or China,
everyone wants foreign investments. According to recent trends, India is only second to
China in the league of favorite investment destinations.
In the report issued by Department of Industrial Policy and Promotion, the fund inflow to
India reached US$ 27.3 billion in the period 2008-09, considered from the month of April

2008 to the month of March 2009. Last quarter of 2008-09 alone witnessed an inflow of
approx. US$ 6.2 billion.
In the reports issued by Reserve Bank of India for outward investment from India, a
growth of 29.6% to US$17.4 billion has been seen in the period 2007-08. The figures do
not include individuals and banks. India is considered the 2nd highest foreign employer in
the United Kingdom after the United States.
Global Investment Scenario
Along with India, the others who are participating in the race of investment among the
developing economies are China, Singapore, Malaysia, Russia and Brazil. Most of them
are vying for contracts from USA and Europe.

ASSOCIATION OF INVESTMENT BANKERS OF INDIA

1. It is an association of Indias investment banks.
2. Was earlier called the Association of Merchant Bankers of India.
3. Functions:

Help members

Engage members

Participate in policy making.

TOP 20 BANKS
1- Goldman Sachs
2 - Morgan Stanley
3 - JPMorgan Chase
4 - Bank of America Merrill Lynch
5 - Deutsche Bank
6 (tie) - Citigroup
6 (tie) - Credit Suisse
8 - Barclays Capital
9 - UBS
10 - HSBC
11 - Nomura Holdings
12 - RBC Capital Markets
13 - BNP Paribas
14 - The Royal Bank of Scotland Group
15 - TD Securities
16 - Wells Fargo
17 - Lazard

18 - Jefferies Group
19 - Socit Gnrale
20 - BMO Capital Markets

Principal Businesses of Investment Banks

Arranges financing for corporations and governments.

1] Debt
2] Equity
3] Convertibles

Advises on mergers and acquisitions (M&A) transactions.

Asset Management Business

1] Offers equity, fixed income, alternative investments, and money market investment
products and services to individual and institutional clients
2] For alternative investment products, the firm co-invests with clients in hedge fund,
private equity and real estate funds

Client Trading

Sells and trades securities and other financial assets as intermediary on behalf of
investing clients.

Proprietary Trading Investment activity by the firm that affects the firm's
accounts, but does not involve investing clients.

Venture Capital n Investment Bank

Description of Industry

Typically limited partnerships

Examples of venture-backed firms include Apple Computer, Cisco

Systems, Starbucks, TCBY, etc.

Table on next slide shows the level of venture involvement in companies over the
last fourteen years.

Managers of start-ups may have objectives that differ significantly from profit
maximization.

Venture capitalists can reduce this information problem in several ways

Long-term motivation

Sit on the board of directors

Disburse funds in stages, based on required results

Invest in several firms, diversifying some risk

Origins of Venture Capital

First U.S. venture capital firm was established

in 1946.

Most venture capital firms in the 1950s and 1960s funded development in oil and
real estate.

Funding has shifted from wealthy individuals to pension funds / corporations.

This is one
of the few risky investments pension funds
are permitted.

Structure of Venture Capital Firms

1. Most are limited partnerships

2. Source of capital includes wealthy individuals, pension funds,
and corporations
3. Investors must be willing to wait years before withdrawing money
4. Fundraising
1. Venture firm solicits commitments, usually less than 100 per deal
5. Investment phase
1. Seed investing
2. Early stage investing
3. Later stage investing
6. Exit
1. Usually IPO as merger
Venture Profitability

The 20-year average return is over 20%, with seed investing providing the highest

average (24.5%) and later stage funding providing the lowest (18%).

Despite some phenomenal years(1999),venture capital has had negative returns in

recent years.

RECENT TRENDS IN INVESTMENT BANKING

1. In the early 1980s, the SEC introduced and made law a rule that permits wellknown companies to register securities without a set sale date and delay the sale of
the securities until the issuers expect their securities will have strong prices in the
market.
2. These registrations are known as "shelf registrations and have become an
important part of investment banking.
3. Shelf financing also contributed to the decline of the historic connections between
specific corporations and investment banks. Nevertheless, it did not change the
basic structure of the industry, which has retained the pyramid shape.
4. The apex investment houses before the introduction of shelf financing by and
large remained the apex houses afterwards. Contemporary investment banking is
also influenced by the growth of institutional investors as key players in the
securities market.
5. Whereas institutional investors accounted for 25 percent of securities trade in the
1960s, they accounted for over 75 percent in the 1990s. In addition, the securities
market has become more global.

OTHER ACTIVITIES
While advising companies and helping them raise money is an important part of what
Wall Street firms do, most perform a number of other functions as well. In fact, most
major banks are highly diversified in terms of the services they offer. Some of their other
income sources include:

Research Larger investment banks have large teams that gather information
about companies and offer recommendations on whether to buy or sell their stock.
They may use these reports internally but can also generate revenue by selling
them to hedge funds and mutual fund managers.

Trading and Sales Most major firms have a trading department that can execute
stock and bond transactions on behalf of their clients. (L8) In the past, some banks
have also engaged in proprietary trading, where they essentially gamble their own
money on securities; however, a recent regulation known as the Volcker Rule has
clamped down on these activities.

Asset Management The likes of J.P. Morgan and Goldman Sachs manage huge
portfolios for pension funds, foundations and insurance companies through their
asset management department. Their experts help select the right mix of stocks,
debt instruments, real estate trusts and other investment vehicles to achieve their
clients unique goals.

Wealth Management Some of the same banks that perform investment banking
functions for Fortune 500 businesses also cater to everyday investors. Through a
team of financial advisors, they help individuals and families save for retirement
and other long-term needs.

Securitized Products These days, companies often pool financial assets from
mortgages to credit card receivables and sell them off to investors as fixedincome products. An investment bank will recommend opportunities to
securitize income streams, assemble the assets and market them to institutional
investors.

The Bottom Line

While some of their more complex products have given investment banks a bad name,
these firms play an important role by helping companies and government entities make
educated financial decisions and raise needed capital

EXAMPLES OF INVESTMENT BANKING

Goldman SachS
The Investment Banking division of Goldman sachS encompasses two groups:
Investment Banking and the Financing Group.

Who They Look For?

Working in the Investment Banking division, you will be helping clients solve some of
their most critical financial and strategic challenges. theyre looking for candidates who
will thrive in a dynamic environment where multitasking and time management skills are
essential.
You should be comfortable working with numbers and be an analytical thinker. Strong
communication and interpersonal skills are needed in order to work successfully with
clients and team members.

How They're Organized?

The Investment Banking divisions dual structure allows us to bring our expertise to a
broad range of products and services. Teams across both groups work closely with clients
to deliver creative financing solutions.

The Investment Banking Group

They work in developed and emerging markets worldwide to deliver banking services for
a wide range of industries their team approach to client service enables our bankers to
play an important role in building relationships and executing transactions.
Transactions might include orchestrating a global equity or debt offering for a corporation

in Asia, advising a US company on a cross-border merger, or creating an innovative

private market transaction for a European financial institution

Their Aim:
Their aim is to provide their clients with the best and most innovative financing and risk
management solutions across the full product spectrum, including equity, debt and
derivatives. To achieve this goal, the Financing Group comprises all Goldman Sachs'
capital markets departments, and operates in close cooperation with other areas of
Investment Banking and other divisions within the firm, including Fixed Income,
Currency and Commodities and Equity.

Investment Banking With City Bank

Our Investment Banking unit provides comprehensive financial advisory and capital
raising services to top corporations, financial institutions and governments worldwide.
Clients receive tailored financial solutions and strategic advisory services on a wide range
of M&A transactions and capital-raising activities including mergers, acquisitions,
divestitures, financial restructurings, underwriting and distributing equity, debt, and
derivative securities.
Citi is the preeminent global investment banking firm as well as the foremost global
underwriter in combined equity and debt issuance. We have cutting-edge capabilities in
every part of the globe for virtually every financial services product that our clients need.
Our bankers are organized into industry, product and regional groups and work closely
with our partners in capital markets, sales and trading, research and global relationship
banking to offer customized financing strategies for our clients.
This combined expertise allows us to offer the most innovative and comprehensive ideas
and solutions in all market conditions by bankers that have in-depth industry knowledge,
local market acumen, and product creativity and execution expertise.

EMPLOYMENT OPPORTUNITIES IN INVESTMENT BANKING

There are so many job opportunities in the investment banks industry due to its wide
range of services and product. You can apply to any investment bank around you if you
have the required qualifications. This includes the following:

1. Education: The investment industry is a very competitive field of and anyone who
wish to get a job as an investment banker or other job positions in the investment must
at least have university degree, this will give you added advantage over other persons
pursuing the same career opportunity, you can also increase your chances of
employment in the job market by going for other higher career program.

2. Good with mathematics: Another added would be having additional knowledge of

statistics and mathematics to secure a job in the investment banking industry.

3. Know your spreadsheet: This would be very important especially if you are not a
degree holder, but it would be advisable to get an MBA certificate after your internship
in the industry.

4. Be ready to move to NY: If youre considering a career in the investment bank and
you are residing in America, be ready to move to NY as most of the major investment
banks are in NY.

5. Experience: Having an experience at least with any other financial institutions would
be a great advantage. Most of the big names in the investment banking sectors prefer to
offer job post to people whom they think are already trained in the financial sector.

6. Skills: Most investment banking jobs would take a substantial amount of your time
and effort, so a proficient skills knowing what youre doing and liking what you do
would take you a long way in the sector.

7. Communications: Having strong communication ability is another skill that the

investment banks do look out for when hiring someone for an employment.

8. Pursuing Career as an investment banker could be very lucrative if the economy is on

the good side, but you could be unemployed if there is a slum in the economy. But this
is actually a very good career to pursue because it pays high.

CONCLUSION
Investment banks emerged as intermediaries in informationally sensitive transactions
based on an informal contracting process that could not be adjudicated by the courts. The
banks established long-term protable relationships with key information providers and
used this information, together with a valuable reputation for probity, to attract security
issuers.
The traditional investment banker had a largely tacit skill set. He learned his trade during
a long on-the-job apprenticeship in a rm that could provide the close relationships, the
mentoring, and the peer-group monitoring upon which tacit skills rely. The information
technology revolution of the late 20th century changed everything. Many traditionally
tacit skills were codied, and massive economies of scale became possible.
Investment bankers jettisoned the partnership form that had fostered their creation and use
of tacit skill in favor of joint stock incorporation, which gave them access to the capital
required to harness the new economies of scale. Tacit skill did not become irrelevant in
the closing years of the 20th century, but it did become harder and harder to reconcile it
with the formal reporting lines and the increased scale of the older investment
banks.Using new communications technologies, investment banks have started to spin off
their most human capital-intensive activities into boutique investment houses, while at the
same time retaining the settlement, trading, and analysis tasks that lend themselves most
naturally to codication and computerization.
What does the future hold? We do not have a crystal ball, but we think that we can draw
some conclusions from the research summarized in these pages.Further technical
advances, coupled with an increasingly strident regulatory state, will likely result in more
codication, more systematization, and more consolidation in the largest investment
banks. This trend will take the biggest players farther from their origins in tacit human
capital businesses. But tacit skill and informal contracts based upon reputation will
remain central features intensive security market trades.
The challenge facing the largest investment banks is therefore to reconcile their scale and
their codification with the tacit skills upon which so many of their rents ultimately
depend.

BIBLIOGRAPHY

Work cited from :

1.wikipedia.org
&
2.investopedia.com