INVESTMENTBANKING

”
SUBMITTED BYAKASH DEVRAJ GUPTAPROJECT GUIDEPROF. ESWA
RIBACHELOR OF MANAGEMENT STUDIESSEMESTER V(2017-
2018)SHRI CHINAI COLLEGE OF COMMERCE ANDECONOMICSAND
INDEX
CHP.NO. TOPIC PAGE NO.
1 INVESTMENT BANKING1.1 INTRODUCTION1.2 DEF
INITION1.3 EVOLUTION OF INVETMENTBANKING1.4
GROWTH OF INVESTMENTBANKING1.5 FUNCTIONS
OF INVESTMENTBANKING1.6 TYPES OF INVESTMEN
T1.7 ORGANISATION STRUCTURE1.8 QUALITIES REQ
UIRED BYINVESTMENT1.9 INVESTMENT BANKINGRE
GULATION IN INDIA1.10 GROWTH OF INVESTMENT
BAKING IN INDIA1.11 NEED OF INVESTMENT BANKI
NGIN INDIA1.12 ORGANIZATIONAL SETUP OFINVEST
MENT BANKERS IN INDIA1.13 IPO PROCESS1.14 DEB
T SYNDICATION AND ITSPROCESS1.15 BUY BACK OF
SHARES1.16 MERGERS AND ACQUISITION1.17 VENT
URE CAPITAL FUNDING2 RESEARCH AND METODOL
OGY3 DATA ANALYSIS ANDINTERPRETATION OF DA
TA4 RECOMMENDATION ANDSUGGESTIONS5 CONC
LUSION6 BIBLIOGRAPHY
 1.1 INTRODUCTION

&Investment Banks assist corporation in raising funds in the public

markets both equity and debt, as well as provide strategic advisory
services for managers, acquisition and types of transactions.
Investment banks differ from Commercial Banks which serve to directly
take deposits and make loans. Investment banks also differ from
brokerages, which in general assist in the purchase and sale of stocks,
bonds and mutual funds. However some firms operate as both
brokerage and investment banks; this includes some of the best known
financial services firms in the world. Investment banks help companies
and government and their agencies to raise money by issuing and
selling securities in the primary market. Investment Banking is
dedicated to fulfill the needs trade and includes by acting as an
intermediary and a financer too. Investment Banking I a result of
oriented profession, commanding high degree of skill and dexterity in
finding business solutions, assisting in investment and financial decision
making assisting in laying corporate strategies, assessing capital needs
and helping in procuring the owned as well as owned funds for
achieving balanced capital structure of the corporate client.

Investment bankers with the confidence of the investors of the General

public, command a high reputation for passing on accurate, adequate
and timely information which helps and facilitates in the functioning of
capital markets, money markets and international financial systems.
Investment bankers preserve their skills as personal possession for
their competitive strength in their profession. As Investment banks
offer a plethora of services to its clients. These services includes
providing valuable advice to the clients on the type of finance to be
raised, issue management process, corporate restructuring strategies,
underwriting services, project feasibility and planning, etc. They provide
various pre-isue and post-issue services to the clients. An Investment
bank is an organization, may be bank, corporate body, firm or
proprietary concern that underwrites, corporate securities and advices
such clients in issue like corporate mergers, etc. involved in the
ownership of commercial ventures. Investment Banking is one of the
most global industries, and is hence continuously challenged to respond
to new developments and innovation in the global financial markets.

1.2 DEFINITIONS
SEBI
–

An Investment bank is defined as a financial institution or an

organization that underwrites corporate securities and advices such
clients on issue like mergers, etc. involved be a bank, corporate body, a
firm or a proprietary concern. In the strictest definition, Investment
banking helps in the raising of funds both in debt and equity, and the
division handing this in an investment bank is often
called the “Investment Banking Division”(IBD). However, any a few
small
firms solely provide this services. Almost all investment banks are
heavily involved of fixed income, foreign exchange, commodity, and
equity securities. An Investment bankers acts as an intermediary
between the issuers and the ultimate purchasers of securities in the
primary securities market. These institutions provide guidance in raising
capital, issue management services, underwrites corporate securities
and provides other advisory services. Investment banks help companies
and government (or their agencies) raise money by issuing and selling
securities in the capital markets (both equity and debt).

Investment Banking
9
Almost all investment banks also offer strategies advisory services for
mergers, Acquisitions, divestiture or other financial services for clients,
such as the trading of derivatives, fixed income, foreign exchange,
commodity. Trading s
ecurities for cash or the promotion of securities or referred to as “sell
side.” The “buy side” constitutes the pension funds, mutual funds,
hedge funds, and
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.
See
Investment Banking
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1.3 EVOLUTION OF INVETMENT BANKING

The term “ Investment bank ” does not have a precise definition, but
is
generally applied to financial houses which, starting from trading as
merchants, expanded their role to financing the trading and
commercial activities of others, especially in the international market
place. For many years, the British houses were know as investment
banks reflecting their origins, Investment banks have retained this
string international flavour and often have offices in many other
countries, particularly in the major financial centers. Investment
Banking in one of the most global industries, and hence continuously
challenged to respond to new development and innovation in the
global financial markets. Throughout the history of investment banking,
many have theorized that all investment banking products and services
would be commoditized. New products with higher margins are
constantly invented trading know-how in new markets. However, since
these can usually not be patented or copyrighted, they are very often
copied quickly by competing banks, pushing down trading margins. For
example, trading bonds and equities for customers is now a commodity
business, but structuring and trading derivatives is highly profitable.
Each OTC contract has to be uniquely and could involve complex pay-
off and risk profiles. Listed option contracts are traded through major
exchanges, and are almost as commoditized as general equity
securities, products have been commoditized.
Investment Banking
11
In addition, while many products have been commoditized, an
increasing amount of profit within investment banks has come from
proprietary trading, where size a positive network benefit (since the
more trades an investment bank does, the more it knows about the
market flow, allowing it to theoretically make better trades and pass
on better guidance to clients).
Vertical Integration
Another trend in Investment Banking at the dawn of the 21
st
century has been the vertical integration of debt securitization.
Previously, investment banks had assisted lenders in raising more
lending funds and having the ability
to offer longer term fixed interest rates by converting the lenders’
outstanding
loans into bonds. For example, a mortgage lender would make a house
loan, and then use the investment bank to sell bonds to fund the debt.
The money from the sale of the bonds can be used to make new loans,
while the lenders accepts loan payments and passes the payments on
to the bondholders. This process is called securitization. However,
lenders have begun to securitize loans themselves, especially in the
areas of mortgage loans. Because of this, and because of the fear that
this will continue, many Investment Banks have focused on becoming
lenders themselves, making loans with the goal of securitizing them. In
fact, in the areas of commercial mortgage, many Investment Banks lend
at loss leader interest rates in order to make money securitizing the
loans, causing them to be a very popular financing option for
commercial property investors and developers. This vertical integration
was root cause of
“SUB PRIME CRISIS”.

nvestment Banking
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1.4 GROWTH OF INVESTMENT BANKS
Investment banks will typically be concerned with several business
units, including Corporate Finance (concerned with managing the
finances of corporations, including mergers, acquisitions and disposals),
often called the Investment Banking Division of the firm; Research
(concerned with investigating, valuing and making recommendations to
clients-both individual investors and larger entities such as hedge funds
and mutual funds-regarding shares and corporate and government
bonds); and Equities or sales and trading
(concerned with buying and selling shares both on behalf of the bank’
s clients
and sometimes also for the bank i
tself).Management of the bank’s own capital,
or Proprietary Trading, is often one of the biggest sources of profit; for
example the banks may structure their books so the they profit form a
fall of bond yields (a rise of bonds prices). An Investment bank provides
its clients expert advice, innovative solutions,
outstanding execution and comprehensive access to the world’s
capital markets.
Whether the clients require investment banking, equities, fixed income
or foreign exchange, investment banks have the intelligence, markets
insight and global coverage to help them to capture opportunities and
manage risk.