Investment banking is considered a highly-complex financial mechanism that can serve many different purposes for various business entities. It is a special segment of banking operations that assists individuals or organisations in raising capital and provide financial consultancy services. Read this blog to get an in-depth idea about all this and more.
What does investment banking entail?
Investment banks act as the middle man between security issuers and investors. Investment banking either rely on buying available shares at an estimated price and resell them to the public or selling shares on behalf of the investor and take a commission on each share.
Investment banking includes the following financial services:
- Proprietary trading (trading securities between personal accounts);
- Mergers and acquisitions advisory (dealing with organisations in M&As);
- Leveraged finance (lending money to firms with the purpose of purchasing assets and settling acquisitions);
- Restructuring (improving company structures to make a brand more efficient and achieve maximum profit);
- New issues or IPOs (helping new firms go public).
What is the ultimate purpose of investment banking?
Investment Banking teams are structured to deliver high-quality strategic advice to the clients. Such creative financing solutions are typically based on risk management transactions, financing, and mergers and acquisitions.
The investment banking sector takes pride in resourcefulness and working on multiple initiatives. People employed at investment banks spend their crucial hours advising a company on cross-border mergers, refinancing an outstanding bond, modifying the initial public offering of a subsidiary and more.
What do investment bankers work on a daily basis?
An investment banker is expected to have impeccable quantitative skills, and the zeal to perform complex financial modelling. The ability to perform a valuation quickly is mandatory in this fast-paced sector, as is multitasking, to establish yourself as a successful investment banker.
An investment banker is accountable for several activities of a client, with the prime responsibility of raising capital through issuing securities (either debt or equity).
They are perceived as aggressive salespeople, who are positioned at a senior level. This further implies that is mandatory for an investment banker to possess strong communication acumen and a large professional network to reach out to. Additionally, people management skills are sure to help you land the job of an investment banker.
A paramount duty for investment bankers (Analyst or Associate) is the analysis of financial data, to provide support with the purpose of capital generation. Daily activities may include evaluation of transactions and financial operations, such as the performance of stocks and bonds. This allows investment bankers to set the pitch to appropriately price and value the assets and securities to be worked on.
These professionals are also required to present results to their clients, to carry out further decision making. A proficient investment banker will include facts and data that can provide the investors to gain the capability of making choices. Investment bankers take a step further to educate their clients as much as the effort put in persuading them.Opt for a specialised investment banking programme and get hired by your dream company right after graduation.