Investment Bankers help generate funds or capital for a company, an individual or any other organization. The basic purpose of Investment Banking is to help individuals and companies grow and expand by arranging funds for this expansion. Investment Banks are very different from commercial banks as they do not accept deposits and give loans but are rather involved in other financial activities like trading financial securities, underwriting shares and bonds, developing financial strategies for their clients and analyzing financial statements. Professionals who work for Investment Banks are called Investment Bankers.
Investment Bankers are highly paid professionals who serve as vital links between investors who have funds and companies which need those funds. They help companies invest their money in places which will help them maximize their gains. Investment Bankers are involved in giving advice to their clients regarding a variety of financial activities like Mergers and Acquisitions, Initial Public Offerings and Corporate Restructuring etc. They also trade financial securities on the behalf of their clients or their banks. The basic aim of any Investment Banker in the world is to help make his/her clients earn a lot of money and expand their business.
Choosing this profession as a career is a good idea if you’re willing to deal with the constant stress and competition. It is to be kept in mind that you will have to start off with entry – level jobs in order to become an Investment Banker. It is a career that offers massive opportunities for growth and financial success. Arranging funds from the market without the help of an Investment Banker can be a daunting task. The result of this is that companies pay Investment Bankers huge amounts to do their work, and deservedly so. They are normally hired by Investment Banks and other financial institution. Sometimes, they are hired by big organizations and companies to exclusively work for them.
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What do Investment Bankers do?
The main job of an Investment Banker is to look after the financial needs of his client and find ways through which the client can earn maximum profit. This might include generating funds for expansion, or even investing money in financial securities like bonds, shares and debentures.
One of the most important tasks that an Investment Banker performs is researching the financial market. They are also involved in Equity Research. They use their financial acumen and spot opportunities through which their clients can earn money. They speculate the future prices of financial securities, study trends in the financial market and look for potential investors who will be willing to invest money in their client’s business. This research combined with their financial acumen forms the basis of their skills and knowledge.
Due to the globalization of the business world, Mergers and Acquisitions of companies has become a regular phenomenon. Investment Bankers play a very important role during such deals. They are responsible for assessing the profitability in the deal for their client and manage the transactions to ensure that the deal goes through as per the financial regulations and legal requirements.
The primary task of an Investment Banker is to help a company or organization raise capital through various ways. Investment Bankers analyze the needs of their clients and choose the most suitable method of raising capital for their client. These methods normally include issuing bonds, shares and debentures or liaising with Venture Capitalists in the Equity Capital Markets.
Investment Bankers play a vital role in helping companies go public. This is usually done through the issue of shares. They are involved in underwriting during Initial Public Offerings (IPOs). IPOs are carried out by offering the public shares or stocks in the company. This turns a private company into a public company and helps it to raise capital. Underwriting is the process of guaranteeing that whatever portion of the total offered shares is not bought, will be purchased by the Investment Bank. It helps in minimizing risk for the company during the IPO and Investment Banks charge a premium for this service.
Consulting and giving advice is very important part of an Investment Banker’s job. This advice can be related to any financial activity, including raising funds, expanding the business, mergers and where and how to invest money so as to gain maximum profits.
Investment Bankers are also involved in trading financial securities for cash or other securities for their clients. This is normally done by selling or buying Equity capital funds, Mutual funds etc. They use their financial acumen and analytical skills to carry out minimum risk – high profit trades on the behalf of their clients.
The job of an Investment Banker also includes creating ‘Pitch Books’. Pitch Books are used for marketing by Investment Bankers to convince clients to work through them or their firm. These books include the details and attributes about the Investment Banks including the deals that they have been a part of, fields of expertise and previous performance in the market. It also looks to inform the client regarding the ways through which the Investment Bank/Banker can help improve the client’s business.
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How to become an Investment Banker?
Investment Bankers are highly skilled professionals in the field of finance. They are involved in a lot of financial activities that deal with a large amount of money such as fund and debt management, trading securities, IPOs etc. They also analyze financial statements and study market trends to provide sound advice to their clients. The job requires a lot of skills and knowledge which can be acquired through education and experience.
To become an Investment Banker, you will need to focus specifically on subjects like Math and Economics. Choose the Commerce stream after your Class 10th and pay attention to subjects like Accounts, Economics and Business Studies. It is also important to study English as it will help improve your communication skills.
After you complete your schooling, you will need to pursue a Bachelor’s in commerce or business administration. However, that won’t be enough. You will most likely need to do an M.B.A in Finance or related fields to be even considered for jobs in this field.
The world of Finance and Investment Banking is highly competitive and there is no space for unskilled and inexperienced Investment Bankers. Therefore, it is necessary to work as an intern wherever and whenever possible in your college days to learn about the work of an Investment Banker and the industry. This will help increase your practical knowledge and confidence.
As the amount of money involved is huge, most clients do not trust new Investment Bankers easily. This makes it all the more important to work on your networking and inter personal skills. Meet people, attend seminars and build relations as people will only work with you if they trust your skills and knowledge.
In order to become an Investment Banker, you will need to constantly research the market and study market trends. An Investment Banker who’s not in touch with the current market trends and opportunities can never succeed. It is important to constantly keep a close look at the financial world and analyze the causes behind fluctuations and their effects.
Institutions:
There are no degrees offered specifically in Investment Banking, but courses in related fields can provide you with the necessary skills and knowledge required for the job. For the Undergraduate level, Bachelor’s courses in Commerce (B.Com) or Business Administration (B.B.A) are good options. Colleges like the Shriram College of Commerce, Delhi and Loyola College, Chennai offer great B.Com courses. For your B.B.A course, the Symbiosis Center for Management Studies, Pune is a great option. For your M.B.A, any of the IIMs and F.M.S (Faculty of Management Studies), New Delhi are two great options.
What are the skills required to become an Investment Banker?
Investment Bankers are highly skilled professionals in the world of Finance. They should have excellent numerical and analytical abilities so as to create profitable opportunities for their clients. Also, they should have excellent communicational skills as they need to constantly deal with clients and investors. They should have the ability to remain organized and calm even during stressful situations. Investment Bankers need to have time management skills as they are often required to work for very long hours and perform a lot of tasks in a single day. They need to be able to work in a team as well as take decisions on their own. They should have leadership and persuasion skills as they are required while dealing with clients and other market players. Investment Bankers need to be confident, dedicated, focused and very hard working. Most importantly, Investment Bankers should have the necessary financial skills and knowledge that will enable them to give beneficial advice to their clients and help them succeed.
Is this the right career for me?
Investment Bankers lead highly stressful lives and work for very long hours every day. Their lifestyle is very hectic and they do not get any time to rest. It is a very competitive field and requires a person to constantly be on the top of his/her game. Investment Bankers have to shoulder a lot of responsibility and own up when they make mistakes. It is career that requires a lot of hard work, constant learning and innovation. On the other hand, the career offers a lot of money and success that sometimes translates into fame and power as well.
This is not the right career for people who are looking to lead easy going lives and who are not comfortable in constantly dealing with numbers and markets and who do not like to take risks. But if you’re somebody who loves playing with numbers and values and if you’re fascinated by the world of stock markets and willing to work extremely hard for success and money, then this might be your dream career.
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