INTRODUCTION

Investment banking, or I- banking, as it is often called, is the term used to describe the business of raising capital for companies and advising them on financing and merger alternatives. Companies need cash in order to grow and expand their business ; investment banks sell securities to public investors in order to raise this cash. These securities can come in the form of stocks or bonds . At a very micro level, Investment banking is concerned with the primary function of assisting the capital market in its function of capital intermediation i.e. the movement of financial resources from those who have them (the Investors), to those who need to make use of them (the Issuers).Banking and financial institutions on the one hand and the capital market on the other are two broad platforms of institutional intermediation for capital flows in the economy. Therefore, it could be inferred that investment banks are those institutions that are the counterparts of banks and the capital market in the function of intermediation in resource allocation. From its small beginnings in the seventies and eighties, investment banking unfolded itself as a full-fledged service industry during1991. From mere public flotation services such as issue managem ent and underwriting , the investment banking industry has evolved to encompass many high profile corporate actions. The term Investment Banking has a much wider connotation and is gradually becoming more of an inclusive term to refer to all types of capital market activity, both fund-based and non-fund based . Investment Banker provides two general functions:1.raising funds for clients and,2.assisting clients in the sale or purchase of securities

Over the decades, backed by evolution and also fuelled by recent technological developments, investment banking has transformed repeatedly to suit the needs of the finance community and thus become

one of the most vibrant and exciting segments of financial services. Investment bankers have always enjoyed celebrity

DEFINITION

There appears to be considerable confusion today about what does and does not constitute an investment bank and investment banker. Let us see what is it? Investment Bank (IB) A financial intermediary that performs a variety of services .This includes underwriting, acting as an intermediary between an issuer of securities and the investing public, facilitating mergers and other corporate reorganizations, and also acting as a broker for institutional clients .The role of the investment bank begins with pre-underwriting counseling and continues after the distribution of securities in the form of advice. Investment Banker A person representing a financial institution that is in t h e business of raising capital for corporations and municipalities. An investment banker may not accept deposits or make commercial loans. Investment bankers are the people who do the grunt work for IPO and bond issues.

MEANING OF INVESTMENT BANKING

In the definition, investment banking is the raising of funds; both in debt and equity, and the division handling this in an investment bank is often called the "Investment Banking Division" (IBD). However, only a f e w small firms provide only this service. Almost all investment banks a r e heavily involved in providing additional financial services for clients, such as t h e t r a d i n g o f derivatives, income, exchange, commodity, a n d equity. I t i s t h e r e f o r e a c c e p t a b l e t o r e f e r t o b o t h t h e " I n v e s t me n t Banking Division" and other 'front office' divisions such as "Fixed Income" as part of "investment banking," and any employee involved in either side as an "investment banker." Furthermore, one who engages in these activities in-house at a non-investment bank is also considered an investment banker

More commonly used today to characterize what was traditionally termed "investment banking" is " sell side." This is trading securities for cash or securities (i.e., facilitating transactions, market-making), or the promotion of securities (i.e. underwriting, research, etc.). The" buy side" constitutes the funds, mutual, hedge, and the investing public who consume the products and services of the sell-side in order to maximize their return on investment. Many firms have both buy and sell side components.

Who needs an Investment Bank?

Any firm contemplating a significant transaction can benefit from the advice of an investment bank. Although large corporations often have sophisticated finance and corporate development departments, an investment bank provides objectivity, a valuable contact network, allows for efficient use of client personnel, and is vitally interested in seeing the transaction close. Most small to medium sized companies do not have a large in-house staff, and in a financial transaction may be at a disadvantage versus larger c o mp e t i t o r s . A q u a l i t y i n v e s tme n t b a n k i n g f i r m c a n p r o v i d e t he s e r v i c e s required to initiate and execute a major transaction, thereby empowering small to medium sized companies with financial and transaction experience without the addition of permanent overhead.

What to look for in an Investment Bank

Investment banking is a service business, and the client should expect top-notch service from the investment banking firm. Generally only large client firms will get this type of service from the major Wall Street investment banks; companies with less than about $100 million in revenues are better served by smaller investment banks. Some criteria to consider include:

Services Offered For all functions except sales and trading, the services should go well beyond simply making introductions, or "brokering" a transaction. For

example, most projects will include detailed industry and financial analysis, preparation of relevant documentation such as an offering memorandum or presentation to the Board of Directors, assistance with due diligence, negotiating the terms of the transaction, coordinating legal, accounting, and other advisors,

Andgenerallyassisting in all phases of the project to ensure succe ssful completion.

Experience It extremely important to make sure that experienced, senior members of the investment banking firm will be active in the project on a day-to-day basis. Depending on the type of transaction, it may be preferable to work with an investment bank that has some background in your specific i n d u s t r y s e g me n t . Th e i n v e s t me n t b a n k s h o u l d h a v e a wi d e n e t wo r k o f relevant contacts, such as potential investors or companies that could be approached for acquisition.

Record of Success Although no reputable investment bank will guarantee success, The firm must have a demonstrated record of closing transactions.

Ability to Work Quickly Often, investment banking projects has very specific deadlines, for example when bidding on a company that is for sale. The investment bank must be willing and able to put the right people on the project and work diligently to meet critical deadlines.

 Fee Structure Generally, an investment bank will charge an initial retainer fee, which may be one-time or monthly, with the majority of the fee contingent upon successful completion of the transaction. It is important to utilize a fee structure that aligns the investment bank's incentive with your own. Ongoing Support Having worked on a transaction for your company, the investment bank will be intimately familiar with your business. After th e transaction, a good investment bank should become a trusted business advisor that can be called upon informally for advice and support on an ongoing basis. Because investment banks are intermediaries, and generally not providers of capital, some executives elect to execute transactions without an investment bank in order to avoid the fees. However, an experienced, quality investment bank adds significant cant value to a transaction and can pay for its fee many times over. The investment banker has a vested interest in making sure the transaction closes, that the project is completed in an efficient time frame, and with terms that provide maximum value to the client. At the same time, the client is able to focus on running the business, rather than on the day-to-day d e t a i l s o f t h e t r a n s a c t i o n , k n o wi n g t h a t t h e t r a n s a c t i o n i s b e i n g h a n d l e d b y individuals with experience in executing similar projects.

GLOBAL INDUSTRIAL STRUCTURE

The Investment banking industry on a global scale is oligopolistic in nature ranging from the global leaders (known as the Global Bulge Group) to Pure Investment banks and Boutique Investment banks. The bulge group consisting of eight investment banks has a global presence and these firms dominate the league in key business segments.

Therefore, the global investment banking industry ranges from the acknowledged global leaders listed above to a large number of mid-sized c o mp e t i t o r s a t a n a t i o n a l o r r e g i o n a l l e v e l a n d t h e r e a r e n d i s s u p p o r t e d b y boutique firms or advisory and sector specialist.

I n v e s t me n t b a n k i n g i s o n e o f t h e mo s t g l o b a l i n d us t r i e s a n d i s h e n c e c o n ti n u o u s l y c h a l l e n g e d t o r e s p o n d t o n e w d e v e l o p me n t s a n d innovation in the global financial markets. Throughout the history of investment banking, many have theorized that all investment b a n k i n g p r o d u c t s a n d s e r v i c e s w o u l d b e commoditized. N e w p r o d u c t s w i t h h i g h e r m a r g i n s a r e c o n s t a n t l y i n v e n t e d a n d ma n u f a c t u r e d b y b a n k e r s i n h o p e s o f wi n n i n g o v e r c l i e n t s a n d d e v e l o p i n g t r a d i n g k n o w- h o w i n n e w ma r k e t s . Ho w e v e r , s i n c e t h e s e c a n u s u a l l y n o t be patented or copyrighted, they are very often

copied quickly by competing banks, pushing down trading margins.

INDIAN SCENARIO

Origin In India, though the existence of this branch of financial services can be traced to over three decades, investment banking was largely confined to merchant banking services. The forerunners of merchant banking in India were the foreign banks. Grind lays Bank (now merged with Standard Chartered Bank in India) began merchant banking operations in 1967 with a license obtained from the RBI followed by the Citibank in 1970. These two banks were providing Services for syndication of loans and raising of equity apart from other advisory services. It was in 1972; the Banking Commission Report asserted the need for merchant banking services in India by the public sector banks. Based on the American experience which led to the passing of the Glas s Steagall Act, the Commission recommended a separate structure for merchant banks so as to distinct them from commercial banks and financial institutions. Merchant banks were meant to manage investments and provide advisory services. Following the above recommendation, the SBI set up its

merchant banking division in 1972. Other banks such as the Bank of India, Bank of Baroda, Syndicate Bank, Punjab National Bank, and Canara Bank also f o l l o we d s u i t t o s e t u p t h e i r me r c h a n t b a n k i n g o u t f i t s . I C I C I wa s t h e f i r s t financial institution to set up its merchant banking division in 1973. The later entrants were IFCI and IDBI with the latter setting up its merchant banking division in 1992. However, by the mid eighties and early nineties, most of the merchant banking divisions of public sector banks were spun off as separate subsidiaries. SBI set up SBI Capital Markets Ltd. in 1986. Other such banks s u c h a s C a n a r a B a n k , B OB , P NB , I n d i a n B a n k a n d I C I C I c r e a t e d s e p a r a t e merchant banking entities.

Growth Merchant banking in India was given a shot in the arm with the a d v e n t o f S EB I i n 1 9 8 8 a n d t h e s u b s e q u e n t i n t r o d u c t i o n o f f r e e pricing o f p r i ma r y ma r k e t e q u i t y i s s u e s i n 1 9 9 2 . Ho we v e r , p o s t 1 9 9 2 , t h e me r c h a n t b a n k i n g i n d u s tr y w a s l a r g e l y d r i v e n b y i s s u e ma n a g e me n t a c t i v i t y wh i c h fluctuated with the trends in the primary market. There have been phases of h e c t i c a c t i v i t y f o l l o w e d b y S E B I s t a r t e d t o regulate the merchant bankers who registered with a s e v e r e s e t b a c k i n b u s i n e s s . SEBI were either in issue management or associated activity such as underwriting or advisor ship. SEBI had four categories of merchant bankers with varying eligibility criteria based on their net worth. The highest number of registered merchant bankers with SEBI as at the end of March 2003 was 124, from a peak of almost thousand in the nineties. In the financial year 20022003 itself, the number decreased by 21.

Constraints in Investment Banking Due to the over-dependence on issue management activity in the initial years, most merchant banks perished in the primary market downturn that followed later. In order to stabilize their businesses, several merchant banks diversified to offer a broader spectrum of capital market services. However, other than a few industry leaders, the other merchant banks have not been able t o t r a n s f o r m t h e m s e l v e s i n t o f u l l s e r v i c e i n v e s t me n t b a n k s. Go i n g b y t h e service portfolio of the leading full service investment banks in India, it may be said that the industry in India has seen more or less similar development as its w e s t e r n counterparts, though the breadth available in the overseas c a p i t a l market is still not present in the Indian capital market. Secondly, due to the lack of institutional financing in a big way to fund capital market activity, it is only the bigger industry players who are in investment banking. The third major deterrent has also been the lack of depth in the secondary market, especially in the corporate debt segment.

Investment banking and Merchant banking

Investment banks and Merchant banks in their purest forms are different kinds of financial instit utions that perform d i f f e r e n t s e r v i c e s . I n p r a c t i c e , t he f i n e l i n e s t h a t s e p a r a t e t h e f u n c t i o n s o f me r c h a n t b a n k s a n d investment banks tend to blur. Traditional merchant banks often expand into the field of marketing of securities and have an onerous responsibility towards the i nvestors w h o i n v e s t i n such securities. While many investment banks participate in trade financing activities. In theory, i n v e s t me n t b a n k s a n d merchant banks perform different functions.

Pure investment banks raise funds for businesses and some governments by registering and issuing debt or equity and selling i t on a market. Traditionally, investment banks only participated in underwriting and s e l l i n g s e c u r i t i e s i n l a r g e blocks. Investment banks facilitate merg er s and acquisitions through share sales and provide research and financial consulting to companies. Traditionally, investment banks did not deal with the general public. Traditional merchant banks primarily perform international financing activities such as foreign corporate investing, foreign real estate investment, trade finance and international transaction facilitation. Some of the activities that a pure merchant bank is involved in may include issuing letters of credit, t r a n s f e r r i n g f u n d s i n t e r n a t i o na l l y, t r a d e c o n s ul t i n g a n d c o - i n v e s t me n t i n projects involving trade of one for or another. As a general rule, investment banks focus on initial offerings(IPOs)a n d l a r g e public and private share offerings . Merchant b a n k s t e n d t o o p e r a t e o n s ma l l - s c a l e c o m p a n i e s a n d o f f e r c r e a t i ve e q u i t y financing , bridge financing ,mezzanine financing a n d a n u mb e r o f c o r p o r a t e credit products. While investment banks tend to focus on larger companies, merchant banks offer their services to companies that are too big for venture capital firms to serve properly, but are still too small to make a compelling public share offering on a large exchange. In order to bridge the gap between venture capital and a public offering, larger merchant banks tend to privately place equity with other financial institutions, often taking on large portions of ownership in companies that are believed to have strong growth potential. Merchant banks still offer trade financing products to their clients. Investment banks rarely offer trade financing because most investment banking c l i e n t s h a v e a l r e a d y o u t g r o wn t h e n e e d f o r t r a d e f i n a n c i n g a n d t h e v a r i o u s credit products linked to it. But,

Investment banking is a term of much wider connotation than Merchant banking as it implies significant fund-based exposure to the capital market. Internationally, Investment banks have progressed in both fund-based and non-fund based segments of the industry. In India, the dependence has been heavily on Merchant banking more particular with issue management and underwriting. However, downturn in the primary market has forced merchant banks to diversify and become fullfledged Investment banks.

INVESTMENT BANKS AS FINANCIAL INTERMEDIARY

Investment bankers facilitate the flow of money. They are financial intermediaries, the critical link between users and providers of capital. They bring together those who need funds with those who have funds, and they ma k e t h e ma r k e t s t h a t a l l o c a t e c a p i t a l a n d r e g u l a t e p r i c e i n t h e s e f i n a n c i a l exchanges. Those who desire to raise capital are called issuers, since they i s s u e o wn e r s h i p i n t h e i r e n t e r p r i s e s ( i .e . e q u i t y) o r o b l i g a t i o n s f r o m t h e i r e n t e r p r i s e s ( i .e . p r o mi s e s t o p a y d e b t i n t e r e s t a n d r e p a y d e b t p r i n c i p a l ) i n exchange for cash or cash equivalents; t hose who provide capital are called investors, since they must invest cash or cash equivalents in exchange for those rights of ownership or obligation. Investment bankers enable issuers to raise capital (i.e. corporations or companies that sell or issue securities for cash) and investors to place capital (i.e. individuals or institutions that

buy or invest in those securities) in the most efficient manner for both. investors, since they must invest cash or cash equivalents in exchange for those rights of ownership or obligation. Investment bankers enable issuers to raise capital (i.e. corporations or companies that sell or issue securities for cash) and investors to place capital (i.e. individuals or institutions that buy or invest in those securities) in the most efficient manner for both.

Investment banking is a dynamic industry characterized by flux a n d transformation. Financial instruments have grown

m o r e c o m p l e x a s financial intermediaries have become more competitive. Blizzards of innovative i n s t r u m e n t s a r e s w e e p i n g financial markets. B o u n d a r i e s a m o n g d i v e r s e financial institutions are b l u r r i n g . B a r r i e r s b e t w e e n i n t e r n a t i o n a l f i n a n c i a l ma r k e t s a r e e r o d i n g . An d, a m p l i f yi n g t h e c o mp l e x i t y a n d t h e c o mp e t i t i o n , financial markets, firms, products, and techniques are merging and melding. Investment banking, long simply synonymous with the d o m e s t i c u n d e r w r i t i n g a n d m a r k e t m a k i n g o f c o r p o r a t e e q u i t y a n d d e b t securities, has expanded dramatically. The industry has been transformed new functions (e.g., the prominence of mergers and acquisitions), new products(e.g., rate risk management mechanisms, such as swaps), new techniques (e.g., securitization of illiquid receivables), new markets (e.g., Tokyo, London and I n d i a ) , a n d n e w mu s c l e ( e .g . , me r c h a n t b a n k i n g ) h a v e c ha n g e d t h e f a c e o f contemporary Investment banking

BUSINESS PORTFOLIO OF INVESTMENT BANKS Globally, investment banks handle significant fund-based business of their own in the capital market along with their non -fund service portfolio that is offered to clients. However these distinct segments are handled e i t h e r o n the same balance sheet or through subsidiaries and a f f i l i a t e s depending upon the regulatory requirements in the operating environment of each country. All these activities are segmented across three broad platforms equity market activity, debt market activity and merger and acquisitions (M&A)a c t i v i t y . In addition, given the structure of the market, t h e r e i s a l s o s e g me n t a t i o n b a s e d o n wh e t h e r a p a r t i c u l a r i n v e s tme n t b a n k b e l o ng s t o a banking parent or investment bank. In the case of universal banks such as the Citigroup or UBS Wa r b u r g , l o a n p r o d u c t s f o r m a s i g n i f i c a n t p a r t o f t h e d e b t ma r k e t b u s i n e s s portfolio. Pure investment banks such as Goldman Sachs, Merrill Lynch and Morgan Stanley Dean Witter do

not have commercial banking in their portfolio and therefore, do not offer loan products. Besides the larger firms, there are a h ost of other domestic players present in each country and mid-sized investment banks, which either specialize in local markets or in certain product segments. The global mergers & acquisitions business is very large and me a s u r e s u p t o t r i l l i o n s o f d o l l a r s a n n u a l l y. I n v e s t me n t b a n k s p l a y a l e a d advisory role in this booming segment of financial advisory business. Besides, they come in as investors in management buy-outs and management buy-in transactions. On the other occasions, wherein investment banks manage private equity funds ,t hey also represent their investors in such buy-out deals.

Some investment banks in the overseas markets also s p e c i a l i z e i n n i c h e s e g me n t s s uc h a s ma n a g e me n t o f h e d g e f u n d s , b u l li o n t r a d e , c o mmo d i t y hedges, real estate and other exotic market. Below given is the diagram, which represents the broad spectrum of global investment activity.

INDIAN INVESTMENT BANKING INDUSTRY CHARACTERISTICS AND STRUCTURE Investment banking in India has evolved in its own characteristic structure over the years both due to business realities and the regulatory regime. On the regulatory front, the Indian regulatory regime does no allow all investment banking functions to be performed under one entity for two reasons to prevent excessive exposure to business risk under one entity and to prescribe and monitor capital adequacy and risk mitigation mechanisms. Therefore, bankruptcy remoteness is a key feature in structuring t h e b u s i n e s s l i n e s o f a n i n v e s t me n t b a n k s o t h a t t h e r i s k s a n d r e w a r d s a r e defined for the investors who provide resources to

the investment banks. In addition, the capital adequacy requirements and leveraging capability for each business line have been prescribed differently under relevant provisions of law. On the same analogy, commercial banks in India have to follow the provisions of the Banking Regulation Act and the RBI regulations, which prohibit them from exposing themselves to stock market investment s and lending against stocks beyond certain specified limits. Therefore, Indian investment banks structure their business segments indifferent corporate entities to be able to meet regulatory norms. For e.g. it is d e s i r a b l e t o h a v e me r c h a n t b a n k i n g i n a s e p a r a t e c o mp a n y a s i t r e q u i r e s s eparate merchant banking license from the SEBI. Merchant Bankers other than

Banks and financial institutions are also prohibited from undertaking any other b u s i n e s s o th e r t h a n t h a t i n t h e s e c u r i t i e s ma r k e t . H o w e v e r , s i n c e b a n k s a r e subject to the Banking Regulation Act, they cannot perform investment banking to a large extent on the same balance sheet. Asset management business in the form of a mutual fund requires a three-tier structure under the SEBI regulations. Equity research should be independent of the merchant banking business so as to avoid the kind of conflict of interest. Stock broking has to be separated into different company, as it requires a stock exchange membership apart from SEBI registration. Investment banking in India has also been influenced by business realities to a large extent . Due to the above reasons, the Indian investment banking industry has a heterogeneous structure. The bigger investment banks have several group e n t i t i e s i n wh i c h t h e c o r e a n d n o n - c o r e b u s i n e s s s e g me n t s a r e d i s t r i b u t e d . Others have either one or more entities depending upon the activity profile. The heterogeneous and fragmented structure is evident even if Indian investment banks are classified on the basis of their activity profile. Some of t h e m s u c h a s S B I , I DB I , I C I C I , I L & F S , K o t a k M a h i n d r a , C i t i b a n k a n d others offer almost the entire gamut of investment banking services permitted in India.

Among these, the long-term financial institutions are g r a d u a l l y transforming themselves into full service commercial banks 9called universal banking in the Indian context. They also have full service investment banking under their fold.

INDIAN INVESTMENT BANKING INDUSTRY DEVELOPMENTS Over the subsequent years, two developments have taken place. Firstly, with the downturn in the capital markets, the merchant banking industry has seen tremendous shake out and only about a 10% of them remain in serious business as pointed out earlier. The other development is that due to the gradual regulatory developments in the capital markets, investment banking a c t i v i t i e s h a v e c o me u n d e r r e g u l a t i o n s wh i c h r e q u i r e s e p a r a t e r e g i s t r a t i o n , licensing and capital controls. Presently, there are no Indian investment banks although there i s a bulge bracket of investment banks in India that have s o m e o v e r s e a s presence to serve Indian issuers and their investors. At the middle level are s e v e r a l n i c h e p l a ye r s i n c l u d i ng t h e me r c h a n t b a n k i ng s u b s i d i a r i e s o f s o me public sector banks. Some of these subsidiaries have been either shut down or s o l d o f f i n t h e w a k e o f t h e t w o s e c u r i t i e s s c a ms s e e n i n 1 9 9 3 a n d i n 2 0 0 0 . However, certain banks such as Canara Bank and Punjab National Bank have had successful merchant banking activities.

Among the middle level players are also merchant banks structured as non-banking financial services companies such as Rabo India Finance Ltd., Alpic Finance etc. There are also in the middle l e v e l , s o me p u r e a d v i s o r y f i r ms s u c h a s L a z a r d C a p i t a l , E r n s t & Yo u n g ,K P M G , P r i c e Wa t e r h o u se C o o p e r s e t c . At t h e l o we r e n d a r e s e v e r a l n i c h e p l a y e r s a n d b o u t i q u e f i r m s , w h i c h f o c u s o n o n e o r m o r e s e g m e n t s o f t h e investment banking spectrum

INSTITUTIONAL INVESTING AND INVESTMENTBANKING . Institutional investors have been a recent phenomenon in the Indian capital market, which till then had the presence of a handful of public financial institutions such as the UTI and the insurance companies. The term l e n d i n g i n s t i t u t i o n s s u c h a s t h e I D B I a n d I F C I did not participate in s e c o n d a r y m a r k e t d e a l i n g a s a matter of policy. With the advent o f liberalization, there are presently a large number of domestic institutional investors in the secondary market apart from approved foreign institutional investors. In addition, institutional investments have risen significantly in the primary markets through venture capital and private equity investments by investors in both the domestic and non-resident categories. Several of the l e a d i n g i n v e s t me n t b a n k s e i t h e r h a v e d e d i c a t e d v e n t u r e f u nd s o r p r i v a t e equity funds that invest in primary market.

What does the 'FIG' at an investment bank refer to?

The 'FIG' at an investment bank usually refers to the financial institutions group - a g r o u p o f p r o f e s s i o n a l s t h a t p r o v i d e s i n v e s t me n t b a n k i n g a n d m e r g e r s a n d a c q u i s i t i o ns e x p e r t i s e t o f i n a n c i a l i n s t i t u t i o n s . I n o r d e r t o p r o v i d e mo r e t a i l o r e d s e r v i c e s , s o me i n v e s t me n t banks further segment their areas of expertise under the financial institutions g r o u p i n t o a b a n k i n g o r f i n a n c i a l s e r v i c e s group, and an insurance group. Some investment banks use these sorts of divisions more as marketing technique than as a representation of real expertise. Some examples of companies that may represent prospective FIG clients include insurance companies specializing in personal o r commercial insurance products, commercial f i n a n c e c o m p a n i e s that provide financial services to b u s i n e s s e s , b a n k s , b r o k e r a g e s , investment dealers, and wealth management companies. The services that the FIGs may provide to clients include, but are not l i m i t e d t o : private and public equity or debt financing, recapitalization, financial restructurings, mergers, acquisitions, corporate valuations, expert f i n a n c i a l o p i n i o n a n d corollary analysis and advisory services. Some other investment banking segme nts inclu de: healt h care, industrial, me d i a , t e l e c o mmu n i c a t i o n s , mi n i n g , e n e r g y, r e t a i l , t e c h n o l o gy a n d r e a l - e s t a t e , a l t h o u g h t h i s i s b y n o m e a n s a n e x h a u s t i v e l i s t o f t h e b u s i n e s s divisions within which investment banks operate.

SERVICE PORTFOLIO OF INDIAN INVESTMENT BANKS The core services provided by Indian investment banks are broadly divided into two categories A) Management of public offers and private placements. B)Corporate advisory services. These are profiled below:

(A)Management of public offers and private placements Initial Public Offer The first exposure of a company to the capital market i.e. I n i t i a l Public Offer. I n i t i a l p u b l i c o f f e r i n g o r I P O , i n f i n a n c i a l m a r k e t terminology, is the initial sale of the common shares of a corporation to the public. It represents a primary market. Companies typically issue stock when they first go public through initial public offerings (IPOs), and they may issue stock and bonds periodically to fund such enterprises as research, new product development, and expansion. IPO, wh ich is currently, perceived by entrepreneurs and start-up executives is a good way to secure money to expand the business without over-reliance upon third-party debt. Before stocks and bonds are issued, investment bankers perform due diligence examinations, which entail carefully evaluating a company's worth in terms of money and equipment (assets) and debt(liabilities). This examination requires the full disclosure of a company's strengths and weaknesses. Investment banks aid companies and governments in selling securities as well as investors in purchasing securities, managing investments, and trading securities. Investment banks take the form of brokers or agents who purchase and sell securities for their clients; dealers or principals who buy and sell securities for their personal interest in turning a profit; and broker-dealers who do both.

The primary service provided by investment banks is underwriting, wh i c h r e f e r s t o g u a r a n t e e i n g a c o mp a n y a s e t price for the securities it plans to issue. If the securities f a i l t o s e l l f o r t h e s e t p r i c e , t h e investment bank pays the company the difference. Therefore, investment banks must carefully determine the set price by considering the

expectations of the company and the state of the market for the securities. The lessons are clear. IPO is a complex process requiring hard work by a skilled team of investment bank: in the end, the market will punish the ill- prepared. Thus, IPO market is of special significance to investment banking s i n c e t h i s i s a n a r e a t h a t p r o v i d e s s t a t u t o r y e x c l u s i v i t y t o t h e m a s l e a d managers. In the days when the public offers market is very vibrant, this area of service forms the main activity for most Indian investment banks. Rights Issues and Secondary Public Offers A rights issue is made to the existing shareholders of a company. The right herein refers to the entitlement of a shareholder to apply for and receive additional shares in the company. It is a right and not obligation. Secondary public offer also known as follow on offering, consists of p o s t - l i s t i n g p u b l i c i s s u e s , o f f e r s f o r s a l e a n d c o m p o s i t e i s s u e s . A l i s t e d company shall be eligible to make rights issue and secondary public offers. A listed company has to consider many more aspects than anunlisted company in approaching its shareholders or the primary market for funds. From Investment banking prospective too, a listed company has a set of opportunities and limitations as compared to an unlisted company.

Role of Investment Banker in Listed Companies The functional areas for investment bankers in listed companies are thus listed below: 1)Acting as advisers and arrangers in raising debt and equity finance through the capital market. 2)Acting as advisers and arrangers for private placement of debt and equity. 3 ) Ac t i n g a s me r c h a n t b a n k e r s f o r t r a n s a c t i o n s r e l a t i n g t o r i g h t s i s s u e s a n d secondary public offers. 4)Advise companies on pricing and valuation for various types of offers. 5)Advise companies on post-listing issues and offerings.

6)Advise companies on buy backs and act as merchant bankers for such offers.

Private Placement of Equity Equity capital can be raised through public offers or through private issues. The term private issue of equity has to be interpreted in terms of issue of equity shares i n t h e n o n - p u b l i c r o u t e e i t h e r t h r o u g h a p r i v a t e o f f e r i n g o r b y o t h e r means. Private placement is distinguished from the public offering of securities. Depending upon the category of investors being looked at and the status of the investor company, the private market for raising equity can be broadly classified as

INSTITUTION and NON-INSTITUTIONAL

The Institutional investors are Venture Capital funds and Private Equity funds I n v e s t me n t B a n k e r s a l s o p l a c e s e c u r i t i e s wi t h a l i mi t e d n u mb e r o f institutional investors such as insurance companies, investment companies, and pension funds. Venture Capital funds is institutional risk capital that has the mandate of investing in start-up companies. The investment banker plays a key advisory role in formulating the business of a start-up company and also helps it to raise its finances. Broadly, the investment banker can deliver the following services to a start-up company:

 Strategy and business advisory services in formulating the business model for the companys stated business objective. Perform a study of the industry landscape and competitor analysis, product pricing strategy and SWOT analysis. Advise the company on the necessary steps to be taken to make the business model credit worthy and investor friendly.

Act as the arranger for the companys debt or equity financing as per the financing plan that includes representation and negotiations. Raise financing for the company in the most efficient way possible. Considering the fact that investment banks provide transaction oriented services, it is found that most of the top line investment banks do not p r e f e r t o wo r k wi t h s t a r t - u p s i n p u r e a d v i s o r y r o l e u n l e s s t h e c o mp a n y s business plan is large enough to their linking. Private Equity funds on the other hand, are larger investors investing in later stage companies. In this area, the role of investment banker is more transaction oriented than in venture capital fund raising. This is because, the business model of the company is more established, the organization is fully in place and the cash flow model is proven. The engagement in connection with a private equity transaction can be summarized as follows: I d e n t i f y a n d i n i t ia t e c o n t a c t wi t h p r o s p e c t i v e i n v e s t o r s , i n c l u d i n g r o a d shows, and following up as necessary; Represent or accompany the company in m e e t i n g s , p r e s e n t a t i o n s a n d ensuring negotiations with prospective Investors; Review the outcome of such meetings with the company, and recommend to the company further action as may be required;

 Review and advise on proposals/offers from prospective investors; The NON-INSTITUTIONAL investors include high n e t wo r t h i n v e st o r s ( c a l l e d H NI s ) , s e e d s t a g e v e n t u r e i n v e s t o r s ( a l s o c a l l e d angel investors), financial and investment companies, other corporate, stock broking companies, portfolio investors, institutional market investors such as mu t u a l f u n d s a n d , f o r e i gn i n s t i t u t io n a l i n v e s t o r s a n d n o n - r e s i d e n t Indians Private placements in the non-institutional category are generally made through c l o s e s o u r c e s . S u c h k i n d o f l i m i t e d p r i v a t e o f f e r s a r e g e n e r a l l y m a d e b y appointing a suitable agency that can facilitate the fund raising. While some investment banks specialize only in raising venture c a p i t a l a n d p r i v a t e e q u i t y , o t h e r s t h a t h a v e s t r o n g i n v e s t o r r e l a t i o n s h i p s especially in the HNI category, offer private placements to non-institutional investors as a service. These are boutique investment banks that are often an extension of stock broking houses. Private Placement of Debt The private placement market for debt securities essentially consists of medium to long-term debt securities such as debentures and bonds being placed privately with selected investors, mostly institutional or high net wo r t h pr i v a t e i n v e s t o r s . A s o f n o w, t h e p r i v a t e p l a c e me n t ma r k e t wh i c h i s considered as a market for the informed investor and the placement being made i n a c l o s e l o o p , h a s been hugely popular due to its simple and quick d e a l process, lack of elaborate disclosures and regulatory clearances. Private placement of Debt is an important source of funds both for companies under the Companies Act and other types of entities such as public sector corporations, financial institutions and banks. Debt securities issued through private placement can also be listed on the stock exchange to provide them with liquidity. Therefore, there are three main constituents in this market the issuers, t h e investors a n d b o t h t h e s e a r e b r o u g h t t o g e t h e r b y t h e investment banker who acts as the arranger to the placement. The

deal process typically s t a r t s wi t h t he i s s u e r r o l l i n g o u t a p l a n t o r a i s e f u nd s t h r o u g h t h e p r i v a t e p l a c e m e n t r o u t e . The first step in this direction would be to appoint t h e investment bank as an arranger to the whole placement. The first step for the investment banker is to ascertain that the company has taken the necessary approvals from its board, shareholders and existing lenders for the proposed debt and has the necessary powers under its memorandum and articles of association, Sec 293(1)(a) and 293(1)(d) of the Companies Act. The arranger has to then become familiar with the companys business, the industry space, the financials of the company and the financing requirements. Usually a check-list of the required information is prepared and the information is put together in the form of a private placement memorandum. All the necessary back-up papers and documents are also compiled and kept ready for the requirement of investors. One of the important tasks of the investment banker is to arrive at the instrument in offer and the deal structure. The investment banker has to use his conventional wisdom, ingenuity and market intelligence to arrive a t t h e c o u p o n r a t e a n d s u i t a b l e e n h a n c e m e n t s i f a n y , r e q u i r e d f o r t h e instrument. Credit rating is an important process in the deal as it en hances the possibility of closing the deal early by providing all the necessary comfort to investors.

 (B)Corporate Advisory Services Corporate Re-organizations As a result of liberalization and globalization the c o mp e t i t i o n i n t h e c o r p o r a t e s e c t o r i s b e c o mi n g i n t e n s e . To s u r v i v e i n t h e competition, companies are reviewing their strategies, structure and functioning. This has led to corporate restructuring. This is the most important business segment for investment bankers after management of public offers. Globally, in the traditional days of investment banking, this business segment, popularly known as M&A, contributed to a significant share of the bottom line of investment banks, sometimes becoming the largest revenue stream. In a corporate restructuring involving a split-up or di s i n v e s t me n t b y t h e p r o mo t e r s , t h e i n v e s t me n t b a n k e r p r e p a r e s t h e e n t ir e feasibility plan, deal structure, identifies the buyers or the sellers as the case may be, conducts the valuation and due diligence and negotiations for arriving a t t h e t e r m s h e e t . The investment banker also works closely with o t h e r p r o f e s s i on a l s s u c h a s a c c o u n t a n t s a n d l e g a l a d v i s o r s i n o r d e r t o l o o k a t t h e legal, accounting and tax issues involving such corporate re-organizations. Thus in all corporate reorganizations, the investment banker p e r f o r ms t h e p i v o t a l r o l e o f t r a n s a c t i o n s e r v ic e , a c t i n g a s a c a t a l ys t f o r t h e e n ti r e d e a l . Wi t h a g r o w i n g n u mb e r o f me r g e r s a n d a c q u i s i t i o n s a s we l l a s corporate re-organizations, i n v e s t me n t b a n k s h a v e b e c o me i n c r e a s i n g l y involved in the process of arranging these transactions as part of their primary services.

 Project Advisory Services P r o b a b l y o n e o f t h e mo s t f a s c i n a t i n g a r e a s i n c o r p o r a t e f i n a n c e i s p r o je c t f i n a n c e , n o t o n l y b e c a u s e o f i t s c o m p l e x i t y b u t b e c a u s e o f i t s p r o f o u n d economic significance as well. Project financing has traditionally been a term

l o a n b a s e d a c t i v i t y, wh e r e i n v e s t me n t b a n k s h a d v e r y l i t t l e t o d o u n l e s s a n element of capital market financing was involved. However, it has now become an integral part of the advisory service portfolio of leading investment banks, especially of those with a Universal Banking background. Project advisory services relate to all facets of project finance, which begin at the stage of project conceptualization and extend till the completion of financial closures and beyond. Most projects in recent times have used the services of investment banks in this area of high finance. Broadly, the range of services entails the following: Bid advisory services in projects wherein the p r o j e c t i s a w a r d e d t o a particular consortium through a bidding process Advise in entering into other key project contacts Structuring the means of finance for the project Preparation of Project Report, loan applications and associated documents Act as arranger on behalf of the client for representation and negotiations with lenders and equity investors Management of private placements/public offers of debt or equity Achieve financial closure with the best terms and in the best possible time for the project.

 Financial Restructuring Advisory Financial Restructuring as the term denotes is the art of restating the financial position of a company as reflected by its Balance Sheet as on a given date. In order to achieve such restatement a complex financial and legal process is involved as it concerns several conflicting interests. Financial Restructuring can be triggered off either from the asset side of the Balance Sheet or the liability side. T h e r e f o r e , F i n a n c i a l Restructuring encompasses restructuring of debt capital (outside liability) as well as equity capital. The Investment Banking Services in Debt Restructuring I n v e s t me n t b a n k e r s , o f l a t e , h a v e d e v e l o p e d a s e r v i c e a r e a i n a d v i s i n g a n d representing companies in debt restructuring programmers. The various steps involved are as follows:

The first stage would be to formulate a viability plan for the company. For this purpose, the investment banker has to understand the business model, present financial position, existing borrowings and their carrying cost, future business opportunities and the resulting cash flow there from. Once the companys viability and future o p e r a t i n g p l a n h a v e b e e n formulated, the next step would be to float the Debt Restructuring Scheme( D R S ) . T h e DRS has to comply with statutory norms and a p p l i c a b l e guidelines issued by the RBI. The investment banker has to use his expert knowledge and prior experience in formulating the scheme, so as to envisage workable terms of sacrifice from lenders and attractive terms of liability and cost reduction for his client.

 T h e n e x t s t e p wo u l d b e t o p r e s e n t t h e DR S t o l e n d e r s and represent the client in discussion and n e g o t i a t i o n s wi t h t h e c o n s o r t i u m o f l e a d e r s o r individual lenders as the case may be.

The Investment Banking Services in Equity Restructuring The investment banker plays an important role in the equity restructuring of a company, in the area of share buy-back. More often than not, companies that intend to restructure their equity capital are listed on the stock exchanges and therefore, such restructuring may need to comply with the relevant provisions of the SEBI guidelines. However, the real need for an investment banker in equity restructuring is to play the role of a merchant banker for a proposed share buy-back if any, as part of the restructuring programme. Since SEBI guidelines stipulate that share buybacks have to comply with S E B I g u i d e l i n e s , a n d a me r c h a n t b a n k e r h o l d i n g a v a l i d l i c e n s e s h o u l d ma n a g e t h e o f f e r , i t b e c o me s i mp e r a t i v e f o r t h e c o mp a n y t o a p p o i n t a merchant banker as manager to the offer. The major contribution that the merchant banker makes in such assignments ,apart from managing the offer, is in advising the company on the proper method to be adopted for the buyback accordingly. The pricing becomes critical because if the buy-back is under-priced, the o f f e r ma y n o t b e s u c c e s s f u l . On t h e o t h e r h a n d , i f t h e b u y - b a c k i s o v e r p r i c e d , i t ma y e r o d e s h a r e h o l d e r s v a l u e f o r t h o se wh o r e ma i n wi t h t h e company post-buyback. Therefore , the role of the merchant banker becomes extremely important.

Mergers and Acquisitions Advisory

In simple words, merger is a combination of two or more c o mp a n i e s i n t o a s i n g l e wh e r e o n e s u r v i v e s a n d o t h e r l o s e t h e i r c o r p o r a t e existence M&A advisory firms are referred to by a number of names including: investment banks, bulge bracket firms, middle market M&A firms, b u s i n e s s i nt e r me d i a r i e s a n d b u s i n e s s b r o k e r s . As a g e n e r a l r u l e , b u s i n e s s brokers represent client of smaller transactions, middle market firms handle the mid-size transactions and investment banks handle the largest transactions. M&A have traditionally been the forte of investment banks world over. In the earlier era of investment banking, M&A advisory constituted the only advisory area and accounted for the second largest revenue stream of their business. This service warrants high range of skill in the art of financial deal m a k i n g t h a t i n v e s t m e n t b a n k s s p e c i a l i z e i n . I t has become an important advisory area at a time when Indian industry is passing through a transformation to meet the demands of globalization. The investment banking domain in M&A advisory is mainly in partner search, negotiations and deal structuring, valuation, due diligence and d e a l c l o s u r e . M & A a d v i s o r y i s a l s o a n a r e a w h e r e i n i n v e s t me n t b a n k s f a c e competition from pure advisory and professional firms and financial services companies.

The key differentiate or between a firm designated as an investment bank and a firm that operates as an M&A advisor is that an investment bank in addition to performing an M&A advisory role may also:

Advise companies on matters related to the issue and placement of stock Act as an underwriter or agent for corporations and municipalities issuing securities Maintain broker/dealer operations Maintain markets for previously issued securities Offer advisory services to investors Hence some of the services or business segments form the core of investment banking, others provide invaluable support. Interdependence between Different Verticals of Services There are different verticals in investment banking and they do enjoy synergies with one another. This inter-independence and complementary existence has been explained below. M e r c h a n t banking largely relates to management of public floatation of securities or reverse floatation such as t h e b u y - b a c k s a n d o p e n o f f e r s , underwriting is an inherent part of merchant banking for public issues. While, advisory and transaction services help in maintaining an enduring relationship with clients during those times when merchant banking is not a hot activity duet depressed market conditions. The other segment of primary market activity, i.e. venture capital and private e q u i t y h a s e q u a l s yn e r g i e s w i t h me r c h a n t b a n k i n g . Th e s u p p or t b u s i n e s s verticals in the secondary market operations also have synergies with those in the primary equity and debt market segment as far as investment banking is concerned. T h u s , i t m a y b e seen that the growth and success of an investment

b a n k depends on its strengths in each vertical and how well it combines them for synergies. To sum up, investment banking is a business that is very sensitive to t h e e c o n o m i c a n d c a p i t a l market scenario and therefore, the broader t h e platform of its operations, the more is the likelihood of an investment bank surviving business cycles and sudden shocks from the market.

REGULATORY FRAMEWORK FOR INVESTMENTBANKING

Investment banking in India is regulated in its various facets under separate legislations or guidelines issued under statute. The regulatory powers a r e a l s o d i s t r i b u t e d b e t w e e n different regulators depending upon the constitution and status of the investment bank. Primarily the capital market regulator (SEBI) governs pure investment banks, which do not have presence in t h e l e n d i n g o r b a n k i n g b u s i n e s s . H o w e v e r , p r i m a r i l y t h e R B I r e g u l a t e s universal banks and NBFC investment banks in their core business of banking or lending and so far as the investment banking segment is concerned, they are also regulated by SEBI. An overview of the regulatory framework is furnished below: a) At the constitutional level, all investment banking companies incorporated under the Companies Act 1956 are governed by the provisions of that Act. b) Investment Banks that are incorporated under a separate statute such as the S B I o r t h e I DB I a r e r e g u l a t e d b y t h e i r r e s p e c t i v e s t a t u t e . I DB I i s i n t h e process of being converted into a company under the Companies Act. c) Universal Banks are regulated by the Reserve Bank of India under the RBI Act 1934 and the Banking Regulations Act which put restrictions on the investment banking exposures to be taken by banks. The RBI has relaxed the exposure limits for merchant banking

subsidiaries of commercial banks. Till n o w , s u c h c o mp a n i e s we r e r e s t r i c t i n g t h e i r e x p o s u r e t o a s i n g l e e n t i t y through the underwriting business and other fund based commitments such as standby facilities etc. to 25% of their net owned funds (NOF). Therefore, these companies are now on par with other investment banks, which can do so up to 20 times their NOF. d) Investment banking companies that are constituted as non-banking financial companies are regulated operationally by the RBI under chapter III B (sec45H to 45QB) of the Reserve Bank of India Act, 1934. Under these sections RBI is empowered to issue directions in the area of resource mobilization, accounts and administrative controls. The following directions have been issued by the RBI so far: No n - B a n k i n g F i n a n c i a l C o mp a ni e s Ac c e p t a n c e of D e p o s i t s (Reserve Bank) Directions, 1998. NBFCs Prudential Norms (Reserve Bank) Directions, 1998. e) Functionally, different aspects of investment banking are regulated under the Securities and Exchange Board of India Act, 1992 and the guidelines and regulations issued there under. These are listed below: Merchant banking business consisting of management of public offers is a licensed and regulated activity under the S e c u r i t i e s a n d Exchange Board of India (Merchant B a n k e r s ) R u l e s 1 9 9 2 a n d S EB I (Merchant Bankers) Regulations 1992. Underwriting business is regulated under the SEBI (Underwriters)Rules, 1993 and the SEBI (Underwriters) Regulations 1993. The activity of secondary market operations i n c l u d i n g s t o c k broking are regulated under the relevant bylaws of the stock exchange a n d t h e S E B I ( S t o c k brokers and Sub brokers) Rules 1992 and Regulations 1992. Besides, foe curbing unethical trading practices, SEBI has promulgated the SEBI (Prohibition of Insider Trading)

Regulations. 1 9 9 2 a n d t h e S E B I ( P r o h i b i t i o n o f F r a u d u l e n t a n d T r a d e P r a c t i c e s Relating to Securities Markets) Regulations 1995. The business of asset management as mutual funds is regulated under the SEBI (Mutual Funds) Regulations 1996. T h e b u s i n e s s o f venture capital and private equity by such funds that are incorporated in India is regulated by the SEBI (Venture Capital Funds) Regulations, 1996and by those that are incorporated outside India is regulated under the SEBI (Foreign Venture Capital Funds) Regulations 2000. The business of institutional investing by foreign investment banks and other investors in Indian secondary markets is governed by the SEBI(Foreign Institutional Investors) Regulations 1995. f) I n v e s t me n t b a n k s t h a t a r e s e t u p i n I n d i a wi t h f o r e i g n d i r e c t i n v e s t me n t e i t h e r a s jo i n t v e n t u r e s wi t h I n d ia n p a r t n e r s o r a s f u ll y o wn e d s u b s i d ia r i e s of the foreign entities are governed in respect of the foreign investment by the Foreign Exchange Management, 1999 and the Foreign E x c h a n g e Management (Transfer or issue of Security by a P e r s o n Resident outside India) Regulations 2000 issued there under as amended from time to time through circulars issued by the RBI. g) Apart from the above specific regulations relating to investment banking, investment banks are also governed by other laws applicable to all other businesses such as the tax law, contract law, property law, local state laws, arbitration law and other general laws that are applicable in India.

 TREND ANALYSIS OF INVESTMENT BANKING The recent trends in investment banking have shifted sources of profitability or firms. In the last few years, the major trends in investment banking have been: Growth in equity business, particularly IPOs; Increase in mergers and acquisition Dominance of new-economy sectors, such as Technology and telecom. The winners in the market have been the bulge bracket investment banks and highly focused boutiques. The growth of investment banking and research c o s t s i s exceeding growth in revenues, especially for second tier major bracket and boutique investment banks.

Recent Trends in Investment Banking

One of the trends that have been developing in the past few y e a r s i n the global and Indian investment banking arena, i s t h e strong m e r g e n c e o f u n i v e r s a l b a n k s a h e a d o f p u r e i n v e s t m e n t b a n k s a s m a r k e t leaders.

These universal banks have the additional financial muscle of their banking arms that add to their pure investment banking strengths .Pure investment banks have found it unmanageable to m a i n t a i n

leadership positions due to difficult market c o n d i t i o n s a n d t h e economic downturn.

The year 2002 has been dubbed as the watershed year in i n v e s t me n t b a n k in g . Gl o b a l l y, u n iv e r s a l b a n k s s u c h a s t h e Citigroup, JPM o r g a n C h a s e a n d D e u t s c h e B a n k a r e e m e r g i n g s t r o n g l y a g a i n s t p u r e investment banks such as Goldman Sachs and Morgan Stanley. This trend could probably reappear in India as well with the emergence of SBI, ICICI, IDBI and Kotak Mahindra Bank as strong universal banks

Case study on ICICI Securities Ltd.

ICICI Sec Ltd. was amongst the first Indian investment banks to f o r m a d e d i c a t e d M & A p r a c t i c e a n d c o n ti n u e s t o b e a l e a d e r b y p r o v i d i n g innovative and unique solutions to achieve varied objectives of the client. It also has a dedicated practice to assist companies with capital mobilization through t h e p r i v a t e e q u i t y/ v e n t u r e c a p i t a l r o u t e a c r o s s t h e i r l i f e c yc l e .

They assist c o m p a n i e s i n r a i s i n g c a p i t a l d u r i n g t h e s e e d , g r o w t h a n d e x p a n s i o n a n d acquisition financing. They are also at the forefront of capital markets advisory having been involved in most major book building and fixed price offerings over the last decade. ICICI Sec is amongst the leading underwriters of Indian equity with unparalleled execution capabilities. It has a dedicated infrastructure vertical focused on assisting clients in identifying and capitalizing on the opportunities thrown up by the all pervasive boom in the Indian infrastructure sector.

Fixed income of Bonds and Yields ICICI Sec. Ltd. is an acknowledged leader in the Indian fixed income and money markets, with a strong franchise across the spectrum of interest rate products and services institutional sales and trading, resource mobilization and research. One of the first entities to be g r a n t e d P r i m a r y D e a l e r s h i p l i c e n s e b y R B I , I - S e c h a s m a d e p i o n e e r i n g contributions since inception to debt market development in India. The Fixed Income Group features desks trading actively in government securities, swaps and corporate bonds markets. The bond research of the Fixed Income team is a benchmark for the industry. Innovation and insight into rate markets drive I-Secs advice to clients. They actively assist clients in designing and marketing interest rate s t r u c t u r e s t o s u i t t h e i r o b je c t i v e s .

 Equities Dealing with Bulls and Bears

ICICI Securities Limited assists global institutional investors to make the right decisions through insightful research coverage and a client

focused Sales and Dealing team. Mentions in various client survey polls, commending this team for the quality of analysis and client servicing standards, are a testimony to the quality of the team. So welcome to the world of equities. Where Bulls and Bears often collide, run amuck or even go awry. To survive and excel you need a cool head and an analytical mind. With a combined market experience of over 150 years, the equities team at ICICI Securities comprises some of the finest minds in the country manning the research desk, sales desk and the trading desks. But dont take their word for it. Let some of finest equity magazines in the world do the job for them: The only Indian research team to figure in the top ten rankings conducted by Institutional Investor in 2005; Adjudged by Asia money as the Best Brokerage House in 2003.

ICICI Securities Subsidiaries ICICI Sec has wholly owned subsidiary, ICICI Brokerage Services Ltd. (IBSL), whish buys and sells equities for their institutional clients. I C I C I S e c h a s a U . S . s u b s i d i a r y, I C I C I S e c I n c . , w h i c h i s a me mb e r o f t h e National Association of Securities Dealers, Inc. (NASD). As a result of this me m b e r s h i p , I C I C I S e c I n c . c a n e n g a g e i n p e r mi t t e d a c t i v i t i e s i n t h e U. S . s e c u r i t i e s ma r k e t s . Th e s e a c t i v i t i e s i n c l u d e d e a l i n g i n s e c u r i t i e s ma r k e t s transactions in the United States and providing research and investment advice to US investors.

CONCLUSION The Investment Banking industry is come of age and is now g r o wi n g b y l e a p s a n d b o un d s . I n v e s t me n t B a n k i n g c o mp a n i e s i n India has j o i n e d h a n d s w i t h g l o b a l m a j o r s t o a d a p t t o g l o b a l s t a n d a r d s a n d a l s o t o collaborate to work on cross border transactions and participate in international offerings. Hence, given the scope for investment banking in India, the future looks bright f o r t h e i n du s t r y a s a wh o l e i n I n d i a . M a n y mo r e p u r e merchant banks and advisory firms could convert themselves into full service investment banks that would broaden the market and make the service delivery much more efficient. In addition, the technological and market developments shaping the capital market would also provide an added impetus to the growth of investment banking. The market regulator, Securities Exchange Board of India (SEBI) has continuously played an effective role in increasing transparency and has been able to put adequate safeguards to protect general investors interest. T his effort has been the single most important factor because investor confidence is supreme and as long as investor confidence is high, both the capital market and the investment banking industry will continue to do well. Thus, investment banking can be quoted as

 Investment Banking the financial facilitator of market driven capitalism and the economic catalyst of national and international development

WEBLIOGRAPHY

www.wisegeek.com www.investorwords.com www.wikipedia.org www.google.com

BIBLIOGRAPHY

Book of Environment and management of financial service Investment Banking and Securities Trading