Investment Banking in India
Do you dream of being a high-flying professional who wants to make it big in the investment world, but don’t have a clue where to look?
Here’s your answer. If you want to move into Investment Banking, then you should know the overall investment banking scenario in India, List of Top Investment Banks, Kind of Services Offered, their Culture, investment banking Salaries in India, investment banking jobs in India and whether you are fit for Investment Banking Profile.
In this article, we will go in-depth about the investment banking world prevalent in India.
- Overview of Investment Banking in India
- Services Offered by Investment Banks in India
- Top Investment Banks in India
- Recruitment process – Investment Banks in India
- Culture in Investment Banks in India
- Salaries in Investment Banks in India
- Investment Banking in India – Exit Opportunities
- In the final analysis
Overview of Investment Banking in India
Before going into the nitty-gritty of investment banking in India, it’s important to throw some light on the history of investment banking in India.
It all started in the 19th Century. During that period, European banks first established their trading industries in the land of India. Since that ancient time, foreign banks have taken the reign of investment banking in India. But that didn’t last for a long time.
In the 1970s, State Bank of India started to spread its wings and created a bureau of merchant banking. And in the same decade, ICICI bank started offering various merchant banking Merchant Banking Merchant Bank is a company that provides services like fundraising activities like IPOs, FPOs, loans, underwriting. They only deal with companies and businesses.services.
After a decade, banking became the thing of many and more than 30 merchant banks, financial institutions, and commercial banksCommercial BanksA commercial bank refers to a financial institution that provides various financial solutions to the individual customers or small business clients. It facilitates bank deposits, locker service, loans, checking accounts, and different financial products like savings accounts, bank overdrafts, and certificates of deposits. started setting up their operations.
However, until the 1980s, banking didn’t get the hype it deserved. In the 1990s, banking became an industry when more than 1500 bankers registered with SEBI (Securities and Exchange Board of India).
To regulate these huge numbers of banks, it was required to build an institution that will help banks adhere to the compliance and regulations. And that’s how the Association of Investment Bankers of India (AIBI) got started.
The objective of AIBI is to regulate the legal and ethical practices among members and also to promote and encourage the expansion of the industry.
Under AIBI, now there are many banks and financial institutions are registered. Have a look at the following institutions which are registered under AIBI and have already made their name in the investment banking industry in India –
- Axis Bank Ltd.
- Barclays Bank PLC
- BNP Paribas
- Central Bank of India
- Credit Suisse Securities (India) Private Ltd.
- Deutsche Equities India Private Ltd.
- Edelweiss Financial Services Ltd.
- HDFC Bank Ltd.
- HSBC Securities & Capital Markets (India) Private Ltd.
- ICICI Securities Ltd.
- IDBI Capital Market Services Ltd.
- JP Morgan India Private Ltd.
- Morgan Stanley India Co. Private Ltd.
- Religare Capital Markets Ltd.
- SBI Capital Markets Ltd.
- SMC Capitals Ltd.
- Training on Financial Analyst
- Certification Course in Investment Banking
- Complete Mergers and Acquisitions Course
Services Offered by Investment Banks in India
There is a whole gamut of services offered by the investment banks in India. Following are top services that stand out –
- Mergers & Acquisition Advisory: Companies need to expand their market share and generate more revenue. Thus, they need to find a better opportunity to merge or acquire other companiesMerge Or Acquire Other CompaniesA merger and acquisitions (M&A) agreement refers to an agreement between two existing companies to merge into a new company, or the purchase of one company by another, which is done generally to benefit from the synergy between the companies, expand research capacity, expand operations into new segments, and increase shareholder value, among other things. that can help them reach their objectives. Investment banks in India help these companies make the right deals (mergers & acquisition deals) and help them make a prudent decision so that the ROI gets to a maximum and the risk becomes the least.
- Management of Capital Issues: Usually investment banks in India offer management of public issues under two methods – fixed price method and book building Book Building Book Building is a process that helps companies in determining the price of their security when its shares are offered for sale in an IPO with the help of an investment bank. Major stock exchanges and regulators recommend this process because it is the most efficient mechanism for pricing securities in the market.method. They also offer IPO (Initial Public Offering), FPO (Follow on Public OfferFollow On Public OfferFollow on Public Offering (FPO), also known as a seasoned equity offering, is the method to raise capital by offering additional equity or preference shares after raising funds through Initial Public Offer.), Preferential Issues, Rights Issue, QIP (Qualified Institutional Placement) and Debt Placement. The idea is to help the big organizations expand in the long run and to advise them on various strategies along the way.
- Debt Syndication: When a company is looking to finance new opportunities, they always don’t have enough cash to go for it. However, if they talk to the investment bankers, they are able to help them with project finance, term loan, working capital loanWorking Capital LoanA working capital loan is a loan taken out by a company to finance its day-to-day operations, such as funds to cover the company's operational needs for a short period of time, such as debt payments, rents, or payroll, rather than for long-term investments or assets., mezzanine financingMezzanine FinancingMezzanine financing is a type of financing that combines the characteristics of debt and equity financing by granting lenders the right to convert their loan into equity in the event of a default (only after other senior debts are paid off)., external commercial borrowing, etc. These services facilitate the public and private companiesPrivate CompaniesA privately held company refers to the separate legal entity registered with SEC having a limited number of outstanding share capital and shareowners. in tapping into the right opportunities at the right time and ensure solid growth.
- Buybacks/Takeovers: Investment bankers in India advise their clients to buyback their sharesBuyback Their SharesShare buyback refers to the repurchase of the company’s own outstanding shares from the open market using the accumulated funds of the company to decrease the outstanding shares in the company’s balance sheet. This is done either to increase the value of the existing shares or to prevent various shareholders from controlling the company. at the right time. Moreover, they also help them do their due diligence, find out the target company, and facilitate in understanding whether the takeovers are necessary. They also help the companies adhere to compliances and regulations as per SEBI.
- Corporate Advisory: Investment bankers in India offer corporate advisory to various companies, especially to giant companies and corporate bodies. As corporate advisory is a huge area, first they understand the needs of the companies and then offer tailor-made services. They start with business appraisals, and then the investment banks in India help the companies develop a business plan. Once the business plan is developed, they go for strategic project advisory. And then they also help companies with a business valuation, project identification, and corporate restructuring.
List of Top Investment Banks in India
There are many investment banks in India that offer excellent services and have been gradually expanding their reach. But among all of them, here is the list of top 10 Indian investment banks as per the deal volume (these deals are purely based on M&A deals) –
|Rank||Name of the Investment Bank||No. of Deals (2016)|
|1||Ernst & Young Private Ltd.||26|
|2||Price Water House Coopers, Investment Banking Arm||11|
|3||Deloitte Touche Tohmatsu India, LLP||11|
|4||O3 Capital Global Advisory Private Ltd.||8|
|5||KPMG India Private Ltd.||8|
|6||Axis Capital Ltd.||7|
|7||Standard Chartered Bank, Investment Banking DivisionInvestment Banking DivisionInvestment Banking Division is a segment of the investment bank offering advisory & corporate finance services. It executes mergers & acquisitions, deals with capital raising, & handles several kinds of advisory mandates.||6|
|8||Avendus Capital Private Ltd.||6|
|9||JM Financial Institutional Securities Ltd.||6|
|10||KPMG Corporate Finance LLC||6|
Now, let’s have a look at the list of top 10 investment banks as per deal value (M&A) in 2016 –
|Rank||Name of the Investment Bank||Deal Value (in $ millions)||No. of Deals|
|1||Arpwood Capital Private Ltd.||21,891.71||4|
|2||JM Financial Institutional Securities Ltd.||13,599.77||6|
|4||Ernst & Young Global Ltd.||10,898.72||4|
|5||Kotak Mahindra Capital Co. Ltd.||10,149.96||4|
|6||Ambit Private Ltd.||9,730.00||3|
|7||DH Consultants Private Ltd.||9,730.00||1|
|7||Citigroup Global Markets India Private Ltd.||9,730.00||1|
|9||J.P. Morgan Securities LLC||8,000.00||1|
|9||Evercore Partners Inc.||8,000.00||1|
|10||Standard Chartered Bank, Investment Banking DivisionInvestment Banking DivisionInvestment Banking Division is a segment of the investment bank offering advisory & corporate finance services. It executes mergers & acquisitions, deals with capital raising, & handles several kinds of advisory mandates.||3,667.80||6|
Now, let’s look at the list of investment banks that have topped the list in 2016 in terms of IPO in the domestic market –
|Rank||Name of the Investment Bank|
|2||Edelweiss Financial Services|
|5||Kotak Mahindra Bank|
|8||State Bank of India|
|9||JM Financial Institutional Securities Ltd.|
The best part of this list is that only one foreign bank has been included in the list, i.e. HSBC. Remaining all 9 banks belong to India. That means, the reign of foreign investment banking has been declining and more and more Indian investment banks are coming up on the top.
Recruitment process – Investment Banks in India
If you ever dream of being part of the investment banking industry in India, here’s how you can crack the code. But a word of caution – thousands and thousands of students are going the same route and as a result, you may get lost in the crowd.
Have a glance at the recruitment process of these investment banks in India, so that you can prepare well and reach your dream jobs –
- No HR business: As the investment banking industry in India is quite different, rarely HR goes through investment banking resumes. It is done by MD directly. As investment banking professions are not for the faint-hearted, it’s important that the screening is done by the most important executives in the business.
- Never try to tap insider’s information to crack the interview: As an investment banker, you need to be trustworthy as you will be handling millions of bucks of important clients. So, don’t try for any quick fix. Rather try to highlight why you are a good match for the job.
- Selection process: Selecting the best candidates for investment banking is quite different than other sorts of jobs. Usually, the candidates are judged on the basis of their technical skills, leadership ability, communication & interpersonal skills and self-motivation. First of all, the resumes are selected by the MD and then the shortlisted candidates are called for the interview. During the first round, most of the candidates are screened out. Only a few best candidates fit the bill and asked for the last round. If the number of candidates is huge, then there is a chance of biases as not all interviewers would be able to all the candidates. In the final round, HR will brief the candidates about what they can expect during the interview. And then on the basis of consensus, the offer is released to the person who turns out to be most suitable for the company and its clients.
- The most important thing: When an MD of an investment banker asked what is the one thing that separates the best candidate from the rest, he mentioned that GPAs are only important for first time screening; but ultimately what matters most is the willingness of the candidate to make their mark in the investment banking industry. He also mentioned that most of the candidates apply in investment banking jobs in India just for money; very few want to go for the love of investment banking and they are the best of the lot in most cases.
Culture in Investment Banks in India
- The culture in investment banking in India is not something most will look up to. Because there is a huge imbalance between taking risks and love for the work!
- In investment banking, risk-taking abilities and initiatives are directly proportionate to how much money the investment bankers will make, not how much love they have for the job. That’s why unfortunately not all candidates are suitable for investment banking jobs in India.
- It may seem like labor marketLabor MarketThe labour market, also known as the job market, is a well-studied market that operates on the supply and demand dynamics of people looking for work (workers) and organizations/people providing work (employers). though, but usually, in the long term, very few investment bankers stay in one organization as they are offered higher positions by competitors.
- Moreover, there is no work-life balance. You may need to work for 16-18 hours a day to clinch the deals. Only one thing is pretty good here and that is the money. If you can stick to this culture, you will make huge money within a few years.
- Having said that, let’s look at some data about the salaries of investment banking professionals in India.
Investment Banking Salaries in India
According to Glassdoor.co.in, the average salary of investment banking analystsInvestment Banking AnalystsInvestment Banking Analyst works with investment banking team and expertise in the area of Accounting, Financial Modeling, Project financing, Project Valuation, and Financial statement Analysis. These analyst has deep knowledge in Excel and they are good at VBA to analyze the market data and financial modeling. The analytic work consists of building a financial model for different projects like Infrastructure projects (i.e. Power projects, real estate, etc.). in India is INR 9,20,401 per annum.
And here’s a list of the salaries of different investment banks in India –
Let’s have another perspective offered by Payscale.com.
According to Payscale.com, the average salaries for Associate – Investment Banking is INR 989,562.
Let’s also see the common career paths of Associate – Investment Banking in the industry –
Now, who are the popular employers for Associate – Investment Banking? Let’s have a look –
But how experience affects salaries? Let’s have a glance –
That means it is clear that experience matters a lot in terms of salaries in the investment banking industry. You will make more money as you get more exposure and learn more skills.
Investment banking in India is certainly a male-dominated industry. From the report of Payscale.com, 89% are male and only 11% are female holding similar positions in the investment banking industry.
also, have a look at Investment Banking Associate SalaryInvestment Banking Associate SalaryAn Investment Banking Associate is hired by an investment bank. An Associate can be a promoted Analyst after three or four years, or he can be hired directly from a reputable business school. A average annual compensation for an Investment Banking Associate is from $75,000 to $250,000.
Investment Banking in India – Exit Opportunities
If you get bored in investment banking in India or can’t seem to take the pressure, you may have few options to go to like –
- Private EquityPrivate EquityPrivate equity (PE) refers to a financing approach where companies acquire funds from firms or accredited investors instead of stock markets
- Hedge FundsHedge FundsA hedge fund is an aggressively invested portfolio made through pooling of various investors and institutional investor’s fund. It supports various assets providing high returns in exchange for higher risk through multiple risk management and hedging techniques.
- Venture CapitalVenture CapitalVenture capital (VC) refers to a type of long-term finance extended to startups with high-growth potential to help them succeed exponentially.
- Corporate Finance
However, know that exit from investment banking in India will not always seem worthy especially if you are looking for fewer hours of work and you don’t like the financial analysisFinancial AnalysisFinancial analysis is an analysis of finance-related projects/activities, company's financial statements (balance sheet, income statement, and notes to accounts) or financial ratios to evaluate the company's results, performance, and trends, which is useful for making significant decisions such as investment, project planning and financing activities..
In each of the above options, you need to put in a lot of hours (often more) to get to a good position and each of the options would need you to invest your time and energy in looking through financial analysis.
Thus, exit only when you know that you want to explore other opportunities and dimensions; not because you want to escape the daily grind. The idea that you will work 2-3 years in investment banking and then will take a different route is nothing but a myth.
- Investment Banking vs Asset Management
- Investment Banking Internship
- Top Boutique Investment Banks
- Top Bulge Bracket Investment Banks
In the final analysis
Investment banking in India is a bit different than it is in Europe and the USA. India is still an emergent market for investment banking. Slowly the Indian market is ripening and realizing the value of investment banking.
If you want to make a career in investment banking in India, make sure that you have enough practical knowledge (internships) about the market along with a high GPA and MBA from a top-notch B-School.