PRESENTATION

INVESTMENT BANK
Learning objectives
1.Definition of investment bank

2. Importance of investment bank

3. How do investment bank work ?

4. The role of investment bank

5. Investment bank clients

6. Structure of investment bank

7. Investment banker skills

Definition of investment bank
 Investment banking is a special segment of banking
operation that helps individuals or organisations raise
capital and provide financial consultancy services to them.

 An investment bank is a financial service company, or

division of a corporation, that is involved in well-advised
financial transactions on behalf of individuals,
corporations, or governments. 

Importance of investment bank
 Investment banks handle their clients efficiently and
assist them with the necessary knowledge about the
risks and benefits of investing their money in other
companies or organisations.

 Itundergoes thorough investigation of the deal and

project that is to be made by its client in order to
assure that the client’s money goes in a safe place
which will help to minimise the risks associated
with the said deal or project.
Importance of investment bank
 Helps the corporations in raising capital.

 It facilitates the trading of securities thereby, increasing

the liquidity of the securities.

 It provides investment opportunities to the individuals or

entities.

 Most of the corporations get advisory services from the

investment banks regarding the mergers, acquisitions and
divestiture.
How do investment bank work ?
 All investment banking activities are either placed on the
sell or buy side of a transaction.
 Before we go on, you need to remember two things

 First, you need to know the definition

 of securities.

 Second, you need to know that neither the sell or buy

side of investment banking could exist without the other.

 Think of it like this: you are having a lemonade stand. If

you have no lemonade to sell, nobody can buy it. And if

nobody comes to by your lemonade, you cannot sell any.
Sell-side
 Sell side: The sell side of investment banking is
involved in trading securities.

 These securities can be traded for cash or other

securities, depending on what the investor wants.

 It also conducts research and engages prospective new

business.
Buy-side
 Buy side: The buy side of investment banking involves
providing informed financial advice to entities, which
usually consist of private equity funds, mutual funds, life
insurance companies, and hedge funds.

 It serves as a broker to large institutional investors like

mutual funds

 provides money management services and makes buy-

hold-sell decisions.
The role of investment bank
 Investment banks serve several purposes in the
financial and investment world, including:

1. Underwriting New Stock Issues

2. Handling Mergers and Acquisitions

3. And Acting As a Financial Advisor

1.Underwriting New Stock Issues
 Investment banks provide underwriting services for
new stock issues when a company decides to go
public and seeks equity funding.

 Underwritingbasically involves the investment bank

purchasing an agreed-upon number of shares of the
new stock, which it then resells through a stock
exchange.
2. Handling Mergers and Acquisitions
 Handling mergers and acquisitions is a major function
of investment bankers.

 As with IPOs, one of the main areas of expertise for an

investment bank is its ability to evaluate the worth of a
possible acquisition and arrive at a fair price. 

 An investment bank can also help structure and

facilitating the acquisition to make the deal go as
smoothly as possible.
3. Acting As a Financial Advisor

 Investment bankers act in several different advisory

capacities for their clients.

 In addition to handling IPOs, investment banks offer

corporations advice on taking the company public or
raising capital through alternative means

 Investment banks regularly advise their clients on

all aspects of financing.
Investment Banking Clients

 Investment bankers act as advisory to a wide range of

clients for capital raising and Merger and Acquisition
needs.

 Their clientele includes:

1. Governments

2. Corporations

3. Institutions
1. Governments

This division works with the governments to raise

money, trade-in securities, and buy and sell crown
corporations.
2. Corporations
  Investment bankers work with private and public
companies known as corporations to help them
offer Initial Public Offering (IPO)

 Raiseadditional capital for business growth, making

acquisitions, provide research and general
corporate finance advice, etc
3. Institutions

  IBDworks closely with institutional investors who

manage other people’s money (known as
institutions) to help them trade in securities and
provide detailed financial research.
Structure Of Investment Bank
 Investment banks are usually split into three
sections:

1. Front office

2. Middle office

3. Back office
1. Front Office

 The front office is seen as the revenue generator

 Activities in the front office include advising on

mergers and acquisitions

 providing capital raising strategies, sales and

trading, and research. These team members are
customer-facing
2. Middle Office

 The middle office is responsible for risk

management and information technology

 Middle office usually consists of traders, analysts,

and managers who are knowledgeable of trading
activities but usually don’t engage in market
activities themselves.
3. Back Office

 Back office: The back office handles human resources, office

management, and customer service.

 Every major investment bank has considerable

Amounts of in-house software, created by the
Technology team, who are also responsible for
Computer and Telecommunications-based
Support.

 
Investment banker skills
 thewide range of services provided by investment banks,
the people working inside them also need a variety of
investment-related skills.

 Here are the top skills you need to become a successful

investment banker:
1. Financial modeling

2. Business valuation

3. Sales and business development

1. Financial Modeling

 Financialmodeling is the process of creating a

representation of a financial situation.

 Ittypically includes creating mathematical models

to represent the economic health, performance, and
future potential of an asset, project, or investment.
2. Business Valuation

 Investment bankers also need to be well versed in

business valuation, which is the process of estimating the
value of a company.

 This
skill comes especially in handy when investment
bankers are advising clients during a merger or
acquisition.

 They will have to give both the target company and buyer
as accurate of a buying and selling price as possible.
3. Sales and business development
 Investment bankers cannot do their job without some
background knowledge of business development and
sales development.

 Even though they need both, those two concepts are

different.

 Investment bankers need both of these skills because

they are constantly meeting with new and existing
clients to pitch ideas and offer advice, both resulting in
them getting new business and earning more money.
THANK YOU