madhu_rajputra
New member
Hi.. Caqn anyone post a project on leadership styles plzz. It'll be very helpful..
List your projects that u need
- Thread starter priyanka1987
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manilavijay
New member
Well hi priyanka,
Could u please,please help me out with my summer project titled "organization study" (particularly with an apt introduction and conclusion)
Thanx
Mani
anshu_wadhwani
New member
hello dear priyanka
my project is on real estate management
and really thank u for this help
my project is on real estate management
and really thank u for this help
Hi,
Can anybody plz help me out on my projects titled as below:
1. Investor Retention Strategy
2. Integrated Treasury : Structure and Mechanics
I need these very urgently. Please assist at the earliest.
Thanks in advance!
Ravikant
[email protected]
Can anybody plz help me out on my projects titled as below:
1. Investor Retention Strategy
2. Integrated Treasury : Structure and Mechanics
I need these very urgently. Please assist at the earliest.
Thanks in advance!
Ravikant
[email protected]
rajeshri_p
New member
i need a project marketing & finance very urgently. please help me out
Re: help in the project
i need a help in the project of tybms as i decided to do the project of banking sector but i m confused what to take in banking sector can u help me in identifying the popic pls and can u guide me from where do we get the 100 projects other than this site
i need a help in the project of tybms as i decided to do the project of banking sector but i m confused what to take in banking sector can u help me in identifying the popic pls and can u guide me from where do we get the 100 projects other than this site
raj_hemwani
RAJESH HEMWANI
hi i am doing project on INDIAN TELECOM SECTOR
can u help me in this
can u help me in this
[email protected]
New member
can u provide me with 100 marks project on bank as an intermediatries
[email protected]
New member
INTRODUCTION TO INVESTMENT BANKING
________________________________________
Investment bankers function as intermediaries in financial transactions. They are experienced in carrying out projects that, for most companies, take place very rarely, but are critically important.
The role of the Investment Bank
Investment banks provide four primary types of services: raising capital, advising in mergers and acquisitions, executing securities sales and trading, and performing general advisory services. Most of the major Wall Street firms are active in each of these categories. Smaller investment banks may specialize in two or three of these categories.
Raising Capital
An investment bank can assist a firm in raising funds to achieve a variety of objectives, such as to acquire another company, reduce its debt load, expand existing operations, or for specific project financing. Capital can include some combination of debt, common equity, preferred equity, and hybrid securities such as convertible debt or debt with warrants. Although many people associate raising capital with public stock offerings, a great deal of capital is actually raised through private placements with institutions, specialized investment funds, and private individuals. The investment bank will work with the client to structure the transaction to meet specific objectives while being attractive to investors.
Mergers and Acquisitions
Investment banks often represent firms in mergers, acquisitions, and divestitures. Example projects include the acquisition of a specific firm, the sale of a company or a subsidiary of the company, and assistance in identifying, structuring, and executing a merger or joint venture. In each case, the investment bank should provide a thorough analysis of the entity bought or sold, as well as a valuation range and recommended structure.
Sales and Trading
These services are primarily relevant only to publicly traded firms, or firms which plan to go public in the near future. Specific functions include making a market in a stock, placing new offerings, and publishing research reports.
General Advisory Services:
Advisory services include assignments such as strategic planning, business valuations, assisting in financial restructurings, and providing an opinion as to the fairness of a proposed transaction.
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 competitors. A quality investment banking firm can provide the services 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, and generally assisting in all phases of the project to ensure successful 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 industry segment. The investment bank should have a wide network of 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 have 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 the 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 details of the transaction, knowing that the transaction is being handled by individuals with experience in executing similar projects.
Stephen Graham and Andrew Hamilton, Graham, Hamilton & Company, Inc. (202-296-1789)
________________________________________
Did you enjoy this article?
Investment banks help companies and governments and their agencies to raise money by issuing and selling securities in the primary market. The sector takes the North American Industry Classification System (NAICS) code 523110. They assist public and private corporations in raising funds in the capital markets (both equity and debt), as well as in providing strategic advisory services for mergers, acquisitions and other types of financial transactions.
Investment banks also act as intermediaries in trading for clients. Investment banks differ from commercial banks, which take deposits and make commercial and retail loans. In recent years, however, the lines between the two types of structures have blurred, especially as commercial banks have offered more investment banking services. In the US, the Glass-Steagall Act, initially created in the wake of the Stock Market Crash of 1929, prohibited banks from both accepting deposits and underwriting securities; Glass-Steagall was repealed by the Gramm-Leach-Bliley Act in 1999. Investment banks may 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 brokerages and investment banks; this includes some of the best known financial services firms in the world.
In the strictest definition [citation needed], 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 few small firms solely provide this service. Almost all investment banks are heavily involved in providing additional financial services for clients, such as the trading of fixed income, foreign exchange, commodity, and equity securities. It is therefore acceptable to refer to both the "Investment 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 pension funds, mutual funds, hedge funds, 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.
Contents
[hide]
• 1 Raising capital in the capital markets
o 1.1 The main activities and units
• 2 Size of industry
• 3 Recent evolution of the business
• 4 Possible conflicts of interest
• 5 Investment banks
• 6 See also
• 7 External links
[edit] Raising capital in the capital markets
[edit] The main activities and units
The primary function of an investment bank is buying and selling products both on behalf of the bank's clients and also for the bank itself. Banks undertake risk through proprietary trading, done by a special set of traders who do not interface with clients and through Principal Risk, risk undertaken by a trader after he or she buys or sells a product to a client and does not hedge his or her total exposure. Banks seek to maximize profitability for a given amount of risk on their balance sheet[citation needed].
An investment bank is split into the so-called Front Office, Middle Office and Back Office. The individual activities are described below:
Front Office
• Investment Banking is the traditional aspect of investment banks which involves helping customers raise funds in the Capital Markets and advising on mergers and acquisitions. Investment bankers prepare idea pitches that they bring to meetings with their clients, with the expectation that their effort will be rewarded with a mandate when the client is ready to undertake a transaction. Once mandated, an investment bank is responsible for preparing all materials necessary for the transaction as well as the execution of the deal, which may involve subscribing investors to a security issuance, coordinating with bidders, or negotiating with a merger target. Other terms for the Investment Banking Division include Mergers & Acquisitions (M&A) and Corporate Finance.
• Financial Markets is split into four key divisions: Sales, Trading, Research and Structuring.
o Sales and Trading is often the most profitable area of an investment bank[citation needed], responsible for the majority of revenue of most investment banks[citation needed]. In the process of market making, traders will buy and sell financial products with the goal of making an incremental amount of money on each trade. Sales is the term for the investment banks sales force, whose primary job is to call on institutional and high-net-worth investors to suggest trading ideas (on caveat emptor basis) and take orders. Sales desks then communicate their clients' orders to the appropriate trading desks, who can price and execute trades, or structure new products that fit a specific need.
o Research is the division which reviews companies and writes reports about their prospects, often with "buy" or "sell" ratings. While the research division generates no revenue, its resources are used to assist traders in trading, the sales force in suggesting ideas to customers, and investment bankers by covering their clients. In recent years the relationship between investment banking and research has become highly regulated, reducing its importance to the investment bank.
o Structuring has been a relatively recent division as derivatives have come into play, with highly technical and numerate employees working on creating complex structured products which typically offer much greater margins and returns than underlying cash securities.
Middle Office
• Risk Management involves analysing the market and credit risk that traders are taking onto the balance sheet in conducting their daily trades, and setting limits on the amount of capital that they are able to trade in order to prevent 'bad' trades having a detrimental effect to a desk overall. Another key Middle Office role is to ensure that the above mentioned economic risks are captured accurately (as per agreement of commercial terms with the counterparty) correctly (as per standardised booking models in the most appropriate systems) and on time (typically within 30 minutes of trade execution). In recent years the risk of errors has become known as "operational risk" and the assurance Middle Offices provide now include measures to address this risk. When this assurance is not in place, market and credit risk analysis can be unreliable and open to deliberate manipulation.
Back Office
• Operations involves data-checking trades that have been conducted, ensuring that they are not erroneous, and transacting the required transfers. Whilst it provides the greatest job security [citation needed] of divisions within an investment bank, it is a critical part of the bank that involves managing the financial information of the bank and ensures efficient capital markets through the financial reporting function. The staff in these areas are often highly qualified [citation needed] and need to understand in depth the deals and transactions that occur across all the divisions of the bank. [1].
Technology
• 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. Technology has changed considerably in the last few years as more sales and trading desks are using electronic trading platforms. These platforms can serve as auto-executed hedging to complex model driven algorithms...
[edit] Size of industry
Global investment banking revenue increased for the third year running in 2005, to $52.8bn. This was up 14% on the previous year, but 7% below the 2000 peak. The recovery in the global economy and capital markets resulted in an increase in M&A activity, which has been the primary source of investment banking revenue in recent years. Credit spreads are tightening and intense competition within the field has ensured that the banking industry is on its toes.
The US was the primary source of investment banking income in 2005, with 51% of the total, a proportion which has fallen somewhat during the past decade. Europe (with Middle East and Africa) generated 31% of the total, slightly up on its 30% share a decade ago. Asian countries generated the remaining 18%. Between 2002 and 2005, fee income from Asia increased by 98%. This compares with a 55% increase in Europe, and a 46% increase in the US, during this period. [2]
[edit] Recent evolution of the business
Investment banking is one of the most global industries [citation needed], and is hence continuously challenged to respond to new developments and innovation in the global financial markets. Throughout the history [citation needed] of investment banking, many have theorized [citation needed] that all investment banking products and services would be commoditized. New products with higher margins are constantly invented [citation needed] and manufactured by bankers in hopes of winning over clients and developing trading know-how in new markets. However, since these can usually not be patented or copyrighted [citation needed], they are very often copied quickly by competing banks [citation needed], pushing down trading margins.
For example, trading bonds and equities for customers is now a commodity business [citation needed], but structuring and trading derivatives is highly profitable [citation needed]. Each OTC contract has to be uniquely structured and could involve complex pay-off and risk profiles. Listed option contracts are traded through major exchanges, such as the the CBOE, and are almost as commoditized as general equity securities.
In addition, while many products have been commoditized, an increasing amount of profit within investment banks has come from proprietary trading [citation needed], where size creates 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 21st century has been the vertical integration of debt securitization [citation needed]. 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 lender accepts loan payments and passes the payments on to the bondholders. This process is called securitization. However, lenders have begun to securitize loans themselves [citation needed], 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 [citation needed], making loans with the goal of securitizing them. In fact, in the areas of commercial mortgages, many Investment Banks lend at loss leader interest rates [citation needed] in order to make money securitizing the loans, causing them to be a very popular financing option for commercial property investors and developers [citation needed].
[edit] Possible conflicts of interest
Potential conflicts of interest may arise between different parts of a bank, creating the potential for financial movements that could be market manipulation. Authorities that regulate investment banking (the FSA in the United Kingdom and the SEC in the United States) require that banks impose a Chinese wall which prohibits communication between investment banking on one side and research and equities on the other.
Some of the conflicts of interest that can be found in investment banking are listed here:
• Historically, equity research firms were founded and owned by investment banks. One common practice is for equity analysts to initiate coverage on a company in order to develop relationships that lead to highly profitable investment banking business. In the 1990s, many equity researchers allegedly traded positive stock ratings directly for investment banking business. On the flip side of the coin: companies would threaten to divert investment banking business to competitors unless their stock was rated favorably. Politicians acted to pass laws to criminalize such acts. Increased pressure from regulators and a series of lawsuits, settlements, and prosecutions curbed this business to a large extent following the 2001 stock market tumble.[Citation Needed]
• Many investment banks also own retail brokerages. Also during the 1990s, some retail brokerages sold consumers securities which did not meet their stated risk profile. This behavior may have led to investment banking business or even sales of surplus shares during a public offering to keep public perception of the stock favorable.
• Since investment banks engage heavily in trading for their own account, there is always the temptation or possibility that they might engage in some form of front running
What is Investment Banking?
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Investment banking is a field of banking that aids companies in acquiring funds. In addition to the acquisition of new funds, investment banking also offers advice for a wide range of transactions a company might engage in.
Traditionally, banks either engaged in commercial banking or investment banking. In commercial banking, the institution collects deposits from clients and gives direct loans to businesses and individuals. In the United States, it was illegal for a bank to have both commercial and investment banking until 1999, when the Gramm-Leach-Bliley Act legalized it.
Through investment banking, an institution generates funds in two different ways. They may draw on public funds through the capital market by selling stock in their company, and they may also seek out venture capital or private equity in exchange for a stake in their company.
An investment banking firm also does a large amount of consulting. Investment bankers give companies advice on mergers and acquisitions, for example. They also track the market in order to give advice on when to make public offerings and how best to manage the business' public assets. Some of the consultative activities investment banking firms engage in overlap with those of a private brokerage, as they will often give buy-and-sell advice to the companies they represent.
The line between investment banking and other forms of banking has blurred in recent years, as deregulation allows banking institutions to take on more and more sectors. With the advent of mega-banks which operate at a number of levels, many of the services often associated with investment banking are being made available to clients who would otherwise be too small to make their business profitable.
Careers in investment banking are lucrative and one of the most sought after positions in the money-market world. A career in investment banking involves extensive traveling, grueling hours and an often cut-throat lifestyle. While highly competitive and time intensive, investment banking also offers an exciting lifestyle with huge financial incentives that are a draw to many people.
Advantages to Using an Investment Bank
They have financial savvy of the public and private markets versus the typical entrepreneur. Usually provide pricing, timing, and distribution ideas for the offering.
The investment banker takes the risk of distributing the securities. After the contract is signed, the banker is “on the line” for these issues.
Most investment bankers who underwrite also make a market in the security, therefore, supporting the stock in the marketplace.
Certain investment bankers raise the prestige of a company and can generate short-term financing just by their affiliation
Investment Banking Services
Mergers and Acquisitions — We manage the complete process for selling or buying a company or executing a merger between two companies. The Chessiecap Securities team is process driven and uses its senior-level strategy and technical resources to amplify critical steps in the M&A process, such as the development of quality presentation materials and the management of technical and operational due diligence.
Private Placements — We raise capital for clients across the entire spectrum of private equity funding sources, including early through later stage venture capital, mezzanine lenders, buyout firms, and strategic investors. Chessiecap Securities brings to a transaction a national investor network and the highest level of understanding of investors' criteria, preferences and structures to attract the capital that is right for your company. Our disciplined transaction approach manages and streamlines the entire financing process. We prepare management for the rigors of investor scrutiny and generate investor interest while allowing management to continue to run their business.
Divestitures — We help major corporations divest non-core assets that have value in the market either as standalone corporations or through a sale to other companies. The Chessiecap Securities divestiture process is detailed and rigorous. We begin by assessing the factors that may inhibit or enhance the process, including the viability of the technology in the open market, the standalone capability of management, and the post-transaction integration issues. Next, we advise corporate management on whether a divestiture, on all levels, is feasible. Finally, we help companies execute divestitures either by finding corporate buyers or securing financing to allow a spin-out to operate successfully on its own.
Restructuring and Financial Advisory — We enable clients to restructure and preserve valuable assets. Typical restructuring activities include management of the bankruptcy process, raising additional working capital, and negotiating revised financial terms with existing creditors. In addition, we often analyze and make detailed recommendations on how to reduce expenses internally, bolster marketing and sales efforts, and create a plan that demonstrates the potential of existing technology.
Valuations and Fairness Opinions — We bring a new level of diligence and precision to companies. In a regulatory environment that demands accountability, Chessiecap delivers valuations and opinions that are noted for their depth of understanding of the company and the industry. Our work becomes a reliable piece of the foundation in a transaction process.
WE ADAPT TO YOUR METHODS
We share your sense of urgency. As specialists we work with you to create a clear understanding of your needs. We work in concert with your decision-making process; we respect your need for a successful and timely transaction. WE KEEP YOU INFORMED
When appropriate, we provide more data about a decision to be made. We keep you accurately informed to help you manage the risks associated with all financial decisions, whether it be a debt or equity portfolio or a private transaction. In instances where specific in-depth industry or fractional knowledge is required, we call on professionals to help us pinpoint problems, important issues and opportunities.
WE SEEK YOUR AUTHORIZATION BEFORE ACTING
The policies and tactics we propose will be described clearly in a proposal for your approval.
WE REPRESENT YOU WITH DISCRETION
We maintain a policy of confidentiality on all the information about your enterprise with the exception of subjects you authorize us to discuss in pursuit of your objectives.
The best time to call us is before making a financial decision. In this case we offer an independent analysis of your situation and provide valuable advice and alternatives.
Whatever you are contemplating we stand ready to gather and organize the appropriate data and work with you to evaluate the effective alternatives identified. On your behalf we organize tasks and simplify complex issues.
After we have gathered information and analyzed your situation, we position and package a portfolio of financial opportunities.
With a decision to seek financial consultation we help establish the net present value of the subject investment and determine a value range for negotiation and decision. Given your situation we will perform independent analyses to provide a vehicle for evaluating alternatives.
The Investment Banking Group focuses on identifying, financing and advising emerging growth companies as they expand and develop into tomorrow’s market leaders. Roth is a leader in providing emerging growth companies with ready access to the capital markets and a wide variety of financial advisory services. By focusing exclusively on emerging growth companies, Roth has developed an unparalleled understanding of these companies, their entrepreneurial managers and their highly specialized financing needs. The Investment Banking Group features:
• 30 professionals with significant transaction and industry expertise
• A full spectrum of investment banking services including IPOs, Follow-ons / Registered Directs,
PIPEs , M&A Advisory and Debt Capital Markets
• An exceptional client focus that is characterized by long term relationships and a history of advising
clients on multiple transactions
• Deep domain expertise in technology, healthcare, financial services and consumer products
• Comprehensive aftermarket support backed by Wall Street award winning research and
a powerful distribution channel with the premier small-and micro-cap institutional investors
IPOs: .
Initial Public Offerings
The Hinduja Group builds strong relationships with its customers to fulfil their investment-banking and asset-management needs. Such relationships have to be based on :
Trust Which assures customers that their assets are safe.
Discretion Which ensures complete confidentiality
Reliability Through prompt and effective responses to customer needs and
Performance By consistently delivering the expected commercial results.
The Hinduja Group operates an independent global investment banking capability. The Investment Banking Division is broad based and has dedicated professional teams located in London, New York, Geneva and Mumbai.
This division has developed first hand commercial expertise in several key industry sectors around the world through the Hinduja group’s own businesses coupled with an excellent understanding of global capital markets.
We use our expertise and know-how to advise clients on strategies for growth, how to structure and execute mergers and acquisitions and underwriting capital requirements. For corporate clients looking to raise capital, we provide expert advice on the issuance of all forms of equity, bonds and other debt.
Through our brokers we have built strong relationships with corporations, institutional investors and individuals and we are therefore able to serve their brokerage requirements and at the same time provide them with accurate and up to date research.
With respect to institutional and individual investors, our performance in managing their assets is crucial to our success. The Asset Management business employs an “open architecture” system to deliver the full range of wealth management solutions for our clients. This enables us to run a customised investment platform that has the capability to offer asset allocation, risk analysis and selection of the best performing funds available, all backed up with personalised and quality service.
Overall, what distinguishes the Hinduja Group’s investment banking activities are:
• Quality of advice
• A clear understanding of clients’ needs
• Access to many capital sources
• Timely and efficient execution
Although the Investment Banking Division acts from time to time for certain group companies on an arms-length basis, its activities are focused on independent transactions with a broad range of regional and int
________________________________________
Investment bankers function as intermediaries in financial transactions. They are experienced in carrying out projects that, for most companies, take place very rarely, but are critically important.
The role of the Investment Bank
Investment banks provide four primary types of services: raising capital, advising in mergers and acquisitions, executing securities sales and trading, and performing general advisory services. Most of the major Wall Street firms are active in each of these categories. Smaller investment banks may specialize in two or three of these categories.
Raising Capital
An investment bank can assist a firm in raising funds to achieve a variety of objectives, such as to acquire another company, reduce its debt load, expand existing operations, or for specific project financing. Capital can include some combination of debt, common equity, preferred equity, and hybrid securities such as convertible debt or debt with warrants. Although many people associate raising capital with public stock offerings, a great deal of capital is actually raised through private placements with institutions, specialized investment funds, and private individuals. The investment bank will work with the client to structure the transaction to meet specific objectives while being attractive to investors.
Mergers and Acquisitions
Investment banks often represent firms in mergers, acquisitions, and divestitures. Example projects include the acquisition of a specific firm, the sale of a company or a subsidiary of the company, and assistance in identifying, structuring, and executing a merger or joint venture. In each case, the investment bank should provide a thorough analysis of the entity bought or sold, as well as a valuation range and recommended structure.
Sales and Trading
These services are primarily relevant only to publicly traded firms, or firms which plan to go public in the near future. Specific functions include making a market in a stock, placing new offerings, and publishing research reports.
General Advisory Services:
Advisory services include assignments such as strategic planning, business valuations, assisting in financial restructurings, and providing an opinion as to the fairness of a proposed transaction.
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 competitors. A quality investment banking firm can provide the services 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, and generally assisting in all phases of the project to ensure successful 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 industry segment. The investment bank should have a wide network of 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 have 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 the 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 details of the transaction, knowing that the transaction is being handled by individuals with experience in executing similar projects.
Stephen Graham and Andrew Hamilton, Graham, Hamilton & Company, Inc. (202-296-1789)
________________________________________
Did you enjoy this article?
Investment banks help companies and governments and their agencies to raise money by issuing and selling securities in the primary market. The sector takes the North American Industry Classification System (NAICS) code 523110. They assist public and private corporations in raising funds in the capital markets (both equity and debt), as well as in providing strategic advisory services for mergers, acquisitions and other types of financial transactions.
Investment banks also act as intermediaries in trading for clients. Investment banks differ from commercial banks, which take deposits and make commercial and retail loans. In recent years, however, the lines between the two types of structures have blurred, especially as commercial banks have offered more investment banking services. In the US, the Glass-Steagall Act, initially created in the wake of the Stock Market Crash of 1929, prohibited banks from both accepting deposits and underwriting securities; Glass-Steagall was repealed by the Gramm-Leach-Bliley Act in 1999. Investment banks may 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 brokerages and investment banks; this includes some of the best known financial services firms in the world.
In the strictest definition [citation needed], 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 few small firms solely provide this service. Almost all investment banks are heavily involved in providing additional financial services for clients, such as the trading of fixed income, foreign exchange, commodity, and equity securities. It is therefore acceptable to refer to both the "Investment 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 pension funds, mutual funds, hedge funds, 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.
Contents
[hide]
• 1 Raising capital in the capital markets
o 1.1 The main activities and units
• 2 Size of industry
• 3 Recent evolution of the business
• 4 Possible conflicts of interest
• 5 Investment banks
• 6 See also
• 7 External links
[edit] Raising capital in the capital markets
[edit] The main activities and units
The primary function of an investment bank is buying and selling products both on behalf of the bank's clients and also for the bank itself. Banks undertake risk through proprietary trading, done by a special set of traders who do not interface with clients and through Principal Risk, risk undertaken by a trader after he or she buys or sells a product to a client and does not hedge his or her total exposure. Banks seek to maximize profitability for a given amount of risk on their balance sheet[citation needed].
An investment bank is split into the so-called Front Office, Middle Office and Back Office. The individual activities are described below:
Front Office
• Investment Banking is the traditional aspect of investment banks which involves helping customers raise funds in the Capital Markets and advising on mergers and acquisitions. Investment bankers prepare idea pitches that they bring to meetings with their clients, with the expectation that their effort will be rewarded with a mandate when the client is ready to undertake a transaction. Once mandated, an investment bank is responsible for preparing all materials necessary for the transaction as well as the execution of the deal, which may involve subscribing investors to a security issuance, coordinating with bidders, or negotiating with a merger target. Other terms for the Investment Banking Division include Mergers & Acquisitions (M&A) and Corporate Finance.
• Financial Markets is split into four key divisions: Sales, Trading, Research and Structuring.
o Sales and Trading is often the most profitable area of an investment bank[citation needed], responsible for the majority of revenue of most investment banks[citation needed]. In the process of market making, traders will buy and sell financial products with the goal of making an incremental amount of money on each trade. Sales is the term for the investment banks sales force, whose primary job is to call on institutional and high-net-worth investors to suggest trading ideas (on caveat emptor basis) and take orders. Sales desks then communicate their clients' orders to the appropriate trading desks, who can price and execute trades, or structure new products that fit a specific need.
o Research is the division which reviews companies and writes reports about their prospects, often with "buy" or "sell" ratings. While the research division generates no revenue, its resources are used to assist traders in trading, the sales force in suggesting ideas to customers, and investment bankers by covering their clients. In recent years the relationship between investment banking and research has become highly regulated, reducing its importance to the investment bank.
o Structuring has been a relatively recent division as derivatives have come into play, with highly technical and numerate employees working on creating complex structured products which typically offer much greater margins and returns than underlying cash securities.
Middle Office
• Risk Management involves analysing the market and credit risk that traders are taking onto the balance sheet in conducting their daily trades, and setting limits on the amount of capital that they are able to trade in order to prevent 'bad' trades having a detrimental effect to a desk overall. Another key Middle Office role is to ensure that the above mentioned economic risks are captured accurately (as per agreement of commercial terms with the counterparty) correctly (as per standardised booking models in the most appropriate systems) and on time (typically within 30 minutes of trade execution). In recent years the risk of errors has become known as "operational risk" and the assurance Middle Offices provide now include measures to address this risk. When this assurance is not in place, market and credit risk analysis can be unreliable and open to deliberate manipulation.
Back Office
• Operations involves data-checking trades that have been conducted, ensuring that they are not erroneous, and transacting the required transfers. Whilst it provides the greatest job security [citation needed] of divisions within an investment bank, it is a critical part of the bank that involves managing the financial information of the bank and ensures efficient capital markets through the financial reporting function. The staff in these areas are often highly qualified [citation needed] and need to understand in depth the deals and transactions that occur across all the divisions of the bank. [1].
Technology
• 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. Technology has changed considerably in the last few years as more sales and trading desks are using electronic trading platforms. These platforms can serve as auto-executed hedging to complex model driven algorithms...
[edit] Size of industry
Global investment banking revenue increased for the third year running in 2005, to $52.8bn. This was up 14% on the previous year, but 7% below the 2000 peak. The recovery in the global economy and capital markets resulted in an increase in M&A activity, which has been the primary source of investment banking revenue in recent years. Credit spreads are tightening and intense competition within the field has ensured that the banking industry is on its toes.
The US was the primary source of investment banking income in 2005, with 51% of the total, a proportion which has fallen somewhat during the past decade. Europe (with Middle East and Africa) generated 31% of the total, slightly up on its 30% share a decade ago. Asian countries generated the remaining 18%. Between 2002 and 2005, fee income from Asia increased by 98%. This compares with a 55% increase in Europe, and a 46% increase in the US, during this period. [2]
[edit] Recent evolution of the business
Investment banking is one of the most global industries [citation needed], and is hence continuously challenged to respond to new developments and innovation in the global financial markets. Throughout the history [citation needed] of investment banking, many have theorized [citation needed] that all investment banking products and services would be commoditized. New products with higher margins are constantly invented [citation needed] and manufactured by bankers in hopes of winning over clients and developing trading know-how in new markets. However, since these can usually not be patented or copyrighted [citation needed], they are very often copied quickly by competing banks [citation needed], pushing down trading margins.
For example, trading bonds and equities for customers is now a commodity business [citation needed], but structuring and trading derivatives is highly profitable [citation needed]. Each OTC contract has to be uniquely structured and could involve complex pay-off and risk profiles. Listed option contracts are traded through major exchanges, such as the the CBOE, and are almost as commoditized as general equity securities.
In addition, while many products have been commoditized, an increasing amount of profit within investment banks has come from proprietary trading [citation needed], where size creates 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 21st century has been the vertical integration of debt securitization [citation needed]. 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 lender accepts loan payments and passes the payments on to the bondholders. This process is called securitization. However, lenders have begun to securitize loans themselves [citation needed], 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 [citation needed], making loans with the goal of securitizing them. In fact, in the areas of commercial mortgages, many Investment Banks lend at loss leader interest rates [citation needed] in order to make money securitizing the loans, causing them to be a very popular financing option for commercial property investors and developers [citation needed].
[edit] Possible conflicts of interest
Potential conflicts of interest may arise between different parts of a bank, creating the potential for financial movements that could be market manipulation. Authorities that regulate investment banking (the FSA in the United Kingdom and the SEC in the United States) require that banks impose a Chinese wall which prohibits communication between investment banking on one side and research and equities on the other.
Some of the conflicts of interest that can be found in investment banking are listed here:
• Historically, equity research firms were founded and owned by investment banks. One common practice is for equity analysts to initiate coverage on a company in order to develop relationships that lead to highly profitable investment banking business. In the 1990s, many equity researchers allegedly traded positive stock ratings directly for investment banking business. On the flip side of the coin: companies would threaten to divert investment banking business to competitors unless their stock was rated favorably. Politicians acted to pass laws to criminalize such acts. Increased pressure from regulators and a series of lawsuits, settlements, and prosecutions curbed this business to a large extent following the 2001 stock market tumble.[Citation Needed]
• Many investment banks also own retail brokerages. Also during the 1990s, some retail brokerages sold consumers securities which did not meet their stated risk profile. This behavior may have led to investment banking business or even sales of surplus shares during a public offering to keep public perception of the stock favorable.
• Since investment banks engage heavily in trading for their own account, there is always the temptation or possibility that they might engage in some form of front running
What is Investment Banking?
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Investment banking is a field of banking that aids companies in acquiring funds. In addition to the acquisition of new funds, investment banking also offers advice for a wide range of transactions a company might engage in.
Traditionally, banks either engaged in commercial banking or investment banking. In commercial banking, the institution collects deposits from clients and gives direct loans to businesses and individuals. In the United States, it was illegal for a bank to have both commercial and investment banking until 1999, when the Gramm-Leach-Bliley Act legalized it.
Through investment banking, an institution generates funds in two different ways. They may draw on public funds through the capital market by selling stock in their company, and they may also seek out venture capital or private equity in exchange for a stake in their company.
An investment banking firm also does a large amount of consulting. Investment bankers give companies advice on mergers and acquisitions, for example. They also track the market in order to give advice on when to make public offerings and how best to manage the business' public assets. Some of the consultative activities investment banking firms engage in overlap with those of a private brokerage, as they will often give buy-and-sell advice to the companies they represent.
The line between investment banking and other forms of banking has blurred in recent years, as deregulation allows banking institutions to take on more and more sectors. With the advent of mega-banks which operate at a number of levels, many of the services often associated with investment banking are being made available to clients who would otherwise be too small to make their business profitable.
Careers in investment banking are lucrative and one of the most sought after positions in the money-market world. A career in investment banking involves extensive traveling, grueling hours and an often cut-throat lifestyle. While highly competitive and time intensive, investment banking also offers an exciting lifestyle with huge financial incentives that are a draw to many people.
Advantages to Using an Investment Bank
They have financial savvy of the public and private markets versus the typical entrepreneur. Usually provide pricing, timing, and distribution ideas for the offering.
The investment banker takes the risk of distributing the securities. After the contract is signed, the banker is “on the line” for these issues.
Most investment bankers who underwrite also make a market in the security, therefore, supporting the stock in the marketplace.
Certain investment bankers raise the prestige of a company and can generate short-term financing just by their affiliation
Investment Banking Services
Mergers and Acquisitions — We manage the complete process for selling or buying a company or executing a merger between two companies. The Chessiecap Securities team is process driven and uses its senior-level strategy and technical resources to amplify critical steps in the M&A process, such as the development of quality presentation materials and the management of technical and operational due diligence.
Private Placements — We raise capital for clients across the entire spectrum of private equity funding sources, including early through later stage venture capital, mezzanine lenders, buyout firms, and strategic investors. Chessiecap Securities brings to a transaction a national investor network and the highest level of understanding of investors' criteria, preferences and structures to attract the capital that is right for your company. Our disciplined transaction approach manages and streamlines the entire financing process. We prepare management for the rigors of investor scrutiny and generate investor interest while allowing management to continue to run their business.
Divestitures — We help major corporations divest non-core assets that have value in the market either as standalone corporations or through a sale to other companies. The Chessiecap Securities divestiture process is detailed and rigorous. We begin by assessing the factors that may inhibit or enhance the process, including the viability of the technology in the open market, the standalone capability of management, and the post-transaction integration issues. Next, we advise corporate management on whether a divestiture, on all levels, is feasible. Finally, we help companies execute divestitures either by finding corporate buyers or securing financing to allow a spin-out to operate successfully on its own.
Restructuring and Financial Advisory — We enable clients to restructure and preserve valuable assets. Typical restructuring activities include management of the bankruptcy process, raising additional working capital, and negotiating revised financial terms with existing creditors. In addition, we often analyze and make detailed recommendations on how to reduce expenses internally, bolster marketing and sales efforts, and create a plan that demonstrates the potential of existing technology.
Valuations and Fairness Opinions — We bring a new level of diligence and precision to companies. In a regulatory environment that demands accountability, Chessiecap delivers valuations and opinions that are noted for their depth of understanding of the company and the industry. Our work becomes a reliable piece of the foundation in a transaction process.
WE ADAPT TO YOUR METHODS
We share your sense of urgency. As specialists we work with you to create a clear understanding of your needs. We work in concert with your decision-making process; we respect your need for a successful and timely transaction. WE KEEP YOU INFORMED
When appropriate, we provide more data about a decision to be made. We keep you accurately informed to help you manage the risks associated with all financial decisions, whether it be a debt or equity portfolio or a private transaction. In instances where specific in-depth industry or fractional knowledge is required, we call on professionals to help us pinpoint problems, important issues and opportunities.
WE SEEK YOUR AUTHORIZATION BEFORE ACTING
The policies and tactics we propose will be described clearly in a proposal for your approval.
WE REPRESENT YOU WITH DISCRETION
We maintain a policy of confidentiality on all the information about your enterprise with the exception of subjects you authorize us to discuss in pursuit of your objectives.
The best time to call us is before making a financial decision. In this case we offer an independent analysis of your situation and provide valuable advice and alternatives.
Whatever you are contemplating we stand ready to gather and organize the appropriate data and work with you to evaluate the effective alternatives identified. On your behalf we organize tasks and simplify complex issues.
After we have gathered information and analyzed your situation, we position and package a portfolio of financial opportunities.
With a decision to seek financial consultation we help establish the net present value of the subject investment and determine a value range for negotiation and decision. Given your situation we will perform independent analyses to provide a vehicle for evaluating alternatives.
The Investment Banking Group focuses on identifying, financing and advising emerging growth companies as they expand and develop into tomorrow’s market leaders. Roth is a leader in providing emerging growth companies with ready access to the capital markets and a wide variety of financial advisory services. By focusing exclusively on emerging growth companies, Roth has developed an unparalleled understanding of these companies, their entrepreneurial managers and their highly specialized financing needs. The Investment Banking Group features:
• 30 professionals with significant transaction and industry expertise
• A full spectrum of investment banking services including IPOs, Follow-ons / Registered Directs,
PIPEs , M&A Advisory and Debt Capital Markets
• An exceptional client focus that is characterized by long term relationships and a history of advising
clients on multiple transactions
• Deep domain expertise in technology, healthcare, financial services and consumer products
• Comprehensive aftermarket support backed by Wall Street award winning research and
a powerful distribution channel with the premier small-and micro-cap institutional investors
IPOs: .
Initial Public Offerings
The Hinduja Group builds strong relationships with its customers to fulfil their investment-banking and asset-management needs. Such relationships have to be based on :
Trust Which assures customers that their assets are safe.
Discretion Which ensures complete confidentiality
Reliability Through prompt and effective responses to customer needs and
Performance By consistently delivering the expected commercial results.
The Hinduja Group operates an independent global investment banking capability. The Investment Banking Division is broad based and has dedicated professional teams located in London, New York, Geneva and Mumbai.
This division has developed first hand commercial expertise in several key industry sectors around the world through the Hinduja group’s own businesses coupled with an excellent understanding of global capital markets.
We use our expertise and know-how to advise clients on strategies for growth, how to structure and execute mergers and acquisitions and underwriting capital requirements. For corporate clients looking to raise capital, we provide expert advice on the issuance of all forms of equity, bonds and other debt.
Through our brokers we have built strong relationships with corporations, institutional investors and individuals and we are therefore able to serve their brokerage requirements and at the same time provide them with accurate and up to date research.
With respect to institutional and individual investors, our performance in managing their assets is crucial to our success. The Asset Management business employs an “open architecture” system to deliver the full range of wealth management solutions for our clients. This enables us to run a customised investment platform that has the capability to offer asset allocation, risk analysis and selection of the best performing funds available, all backed up with personalised and quality service.
Overall, what distinguishes the Hinduja Group’s investment banking activities are:
• Quality of advice
• A clear understanding of clients’ needs
• Access to many capital sources
• Timely and efficient execution
Although the Investment Banking Division acts from time to time for certain group companies on an arms-length basis, its activities are focused on independent transactions with a broad range of regional and int
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New member
INTRODUCTION TO INVESTMENT BANKING
________________________________________
Investment bankers function as intermediaries in financial transactions. They are experienced in carrying out projects that, for most companies, take place very rarely, but are critically important.
The role of the Investment Bank
Investment banks provide four primary types of services: raising capital, advising in mergers and acquisitions, executing securities sales and trading, and performing general advisory services. Most of the major Wall Street firms are active in each of these categories. Smaller investment banks may specialize in two or three of these categories.
Raising Capital
An investment bank can assist a firm in raising funds to achieve a variety of objectives, such as to acquire another company, reduce its debt load, expand existing operations, or for specific project financing. Capital can include some combination of debt, common equity, preferred equity, and hybrid securities such as convertible debt or debt with warrants. Although many people associate raising capital with public stock offerings, a great deal of capital is actually raised through private placements with institutions, specialized investment funds, and private individuals. The investment bank will work with the client to structure the transaction to meet specific objectives while being attractive to investors.
Mergers and Acquisitions
Investment banks often represent firms in mergers, acquisitions, and divestitures. Example projects include the acquisition of a specific firm, the sale of a company or a subsidiary of the company, and assistance in identifying, structuring, and executing a merger or joint venture. In each case, the investment bank should provide a thorough analysis of the entity bought or sold, as well as a valuation range and recommended structure.
Sales and Trading
These services are primarily relevant only to publicly traded firms, or firms which plan to go public in the near future. Specific functions include making a market in a stock, placing new offerings, and publishing research reports.
General Advisory Services:
Advisory services include assignments such as strategic planning, business valuations, assisting in financial restructurings, and providing an opinion as to the fairness of a proposed transaction.
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 competitors. A quality investment banking firm can provide the services 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, and generally assisting in all phases of the project to ensure successful 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 industry segment. The investment bank should have a wide network of 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 have 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 the 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 details of the transaction, knowing that the transaction is being handled by individuals with experience in executing similar projects.
Stephen Graham and Andrew Hamilton, Graham, Hamilton & Company, Inc. (202-296-1789)
________________________________________
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Investment banks help companies and governments and their agencies to raise money by issuing and selling securities in the primary market. The sector takes the North American Industry Classification System (NAICS) code 523110. They assist public and private corporations in raising funds in the capital markets (both equity and debt), as well as in providing strategic advisory services for mergers, acquisitions and other types of financial transactions.
Investment banks also act as intermediaries in trading for clients. Investment banks differ from commercial banks, which take deposits and make commercial and retail loans. In recent years, however, the lines between the two types of structures have blurred, especially as commercial banks have offered more investment banking services. In the US, the Glass-Steagall Act, initially created in the wake of the Stock Market Crash of 1929, prohibited banks from both accepting deposits and underwriting securities; Glass-Steagall was repealed by the Gramm-Leach-Bliley Act in 1999. Investment banks may 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 brokerages and investment banks; this includes some of the best known financial services firms in the world.
In the strictest definition [citation needed], 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 few small firms solely provide this service. Almost all investment banks are heavily involved in providing additional financial services for clients, such as the trading of fixed income, foreign exchange, commodity, and equity securities. It is therefore acceptable to refer to both the "Investment 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 pension funds, mutual funds, hedge funds, 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.
Contents
[hide]
• 1 Raising capital in the capital markets
o 1.1 The main activities and units
• 2 Size of industry
• 3 Recent evolution of the business
• 4 Possible conflicts of interest
• 5 Investment banks
• 6 See also
• 7 External links
[edit] Raising capital in the capital markets
[edit] The main activities and units
The primary function of an investment bank is buying and selling products both on behalf of the bank's clients and also for the bank itself. Banks undertake risk through proprietary trading, done by a special set of traders who do not interface with clients and through Principal Risk, risk undertaken by a trader after he or she buys or sells a product to a client and does not hedge his or her total exposure. Banks seek to maximize profitability for a given amount of risk on their balance sheet[citation needed].
An investment bank is split into the so-called Front Office, Middle Office and Back Office. The individual activities are described below:
Front Office
• Investment Banking is the traditional aspect of investment banks which involves helping customers raise funds in the Capital Markets and advising on mergers and acquisitions. Investment bankers prepare idea pitches that they bring to meetings with their clients, with the expectation that their effort will be rewarded with a mandate when the client is ready to undertake a transaction. Once mandated, an investment bank is responsible for preparing all materials necessary for the transaction as well as the execution of the deal, which may involve subscribing investors to a security issuance, coordinating with bidders, or negotiating with a merger target. Other terms for the Investment Banking Division include Mergers & Acquisitions (M&A) and Corporate Finance.
• Financial Markets is split into four key divisions: Sales, Trading, Research and Structuring.
o Sales and Trading is often the most profitable area of an investment bank[citation needed], responsible for the majority of revenue of most investment banks[citation needed]. In the process of market making, traders will buy and sell financial products with the goal of making an incremental amount of money on each trade. Sales is the term for the investment banks sales force, whose primary job is to call on institutional and high-net-worth investors to suggest trading ideas (on caveat emptor basis) and take orders. Sales desks then communicate their clients' orders to the appropriate trading desks, who can price and execute trades, or structure new products that fit a specific need.
o Research is the division which reviews companies and writes reports about their prospects, often with "buy" or "sell" ratings. While the research division generates no revenue, its resources are used to assist traders in trading, the sales force in suggesting ideas to customers, and investment bankers by covering their clients. In recent years the relationship between investment banking and research has become highly regulated, reducing its importance to the investment bank.
o Structuring has been a relatively recent division as derivatives have come into play, with highly technical and numerate employees working on creating complex structured products which typically offer much greater margins and returns than underlying cash securities.
Middle Office
• Risk Management involves analysing the market and credit risk that traders are taking onto the balance sheet in conducting their daily trades, and setting limits on the amount of capital that they are able to trade in order to prevent 'bad' trades having a detrimental effect to a desk overall. Another key Middle Office role is to ensure that the above mentioned economic risks are captured accurately (as per agreement of commercial terms with the counterparty) correctly (as per standardised booking models in the most appropriate systems) and on time (typically within 30 minutes of trade execution). In recent years the risk of errors has become known as "operational risk" and the assurance Middle Offices provide now include measures to address this risk. When this assurance is not in place, market and credit risk analysis can be unreliable and open to deliberate manipulation.
Back Office
• Operations involves data-checking trades that have been conducted, ensuring that they are not erroneous, and transacting the required transfers. Whilst it provides the greatest job security [citation needed] of divisions within an investment bank, it is a critical part of the bank that involves managing the financial information of the bank and ensures efficient capital markets through the financial reporting function. The staff in these areas are often highly qualified [citation needed] and need to understand in depth the deals and transactions that occur across all the divisions of the bank. [1].
Technology
• 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. Technology has changed considerably in the last few years as more sales and trading desks are using electronic trading platforms. These platforms can serve as auto-executed hedging to complex model driven algorithms...
[edit] Size of industry
Global investment banking revenue increased for the third year running in 2005, to $52.8bn. This was up 14% on the previous year, but 7% below the 2000 peak. The recovery in the global economy and capital markets resulted in an increase in M&A activity, which has been the primary source of investment banking revenue in recent years. Credit spreads are tightening and intense competition within the field has ensured that the banking industry is on its toes.
The US was the primary source of investment banking income in 2005, with 51% of the total, a proportion which has fallen somewhat during the past decade. Europe (with Middle East and Africa) generated 31% of the total, slightly up on its 30% share a decade ago. Asian countries generated the remaining 18%. Between 2002 and 2005, fee income from Asia increased by 98%. This compares with a 55% increase in Europe, and a 46% increase in the US, during this period. [2]
[edit] Recent evolution of the business
Investment banking is one of the most global industries [citation needed], and is hence continuously challenged to respond to new developments and innovation in the global financial markets. Throughout the history [citation needed] of investment banking, many have theorized [citation needed] that all investment banking products and services would be commoditized. New products with higher margins are constantly invented [citation needed] and manufactured by bankers in hopes of winning over clients and developing trading know-how in new markets. However, since these can usually not be patented or copyrighted [citation needed], they are very often copied quickly by competing banks [citation needed], pushing down trading margins.
For example, trading bonds and equities for customers is now a commodity business [citation needed], but structuring and trading derivatives is highly profitable [citation needed]. Each OTC contract has to be uniquely structured and could involve complex pay-off and risk profiles. Listed option contracts are traded through major exchanges, such as the the CBOE, and are almost as commoditized as general equity securities.
In addition, while many products have been commoditized, an increasing amount of profit within investment banks has come from proprietary trading [citation needed], where size creates 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 21st century has been the vertical integration of debt securitization [citation needed]. 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 lender accepts loan payments and passes the payments on to the bondholders. This process is called securitization. However, lenders have begun to securitize loans themselves [citation needed], 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 [citation needed], making loans with the goal of securitizing them. In fact, in the areas of commercial mortgages, many Investment Banks lend at loss leader interest rates [citation needed] in order to make money securitizing the loans, causing them to be a very popular financing option for commercial property investors and developers [citation needed].
[edit] Possible conflicts of interest
Potential conflicts of interest may arise between different parts of a bank, creating the potential for financial movements that could be market manipulation. Authorities that regulate investment banking (the FSA in the United Kingdom and the SEC in the United States) require that banks impose a Chinese wall which prohibits communication between investment banking on one side and research and equities on the other.
Some of the conflicts of interest that can be found in investment banking are listed here:
• Historically, equity research firms were founded and owned by investment banks. One common practice is for equity analysts to initiate coverage on a company in order to develop relationships that lead to highly profitable investment banking business. In the 1990s, many equity researchers allegedly traded positive stock ratings directly for investment banking business. On the flip side of the coin: companies would threaten to divert investment banking business to competitors unless their stock was rated favorably. Politicians acted to pass laws to criminalize such acts. Increased pressure from regulators and a series of lawsuits, settlements, and prosecutions curbed this business to a large extent following the 2001 stock market tumble.[Citation Needed]
• Many investment banks also own retail brokerages. Also during the 1990s, some retail brokerages sold consumers securities which did not meet their stated risk profile. This behavior may have led to investment banking business or even sales of surplus shares during a public offering to keep public perception of the stock favorable.
• Since investment banks engage heavily in trading for their own account, there is always the temptation or possibility that they might engage in some form of front running
What is Investment Banking?
X
Close this window
Investment banking is a field of banking that aids companies in acquiring funds. In addition to the acquisition of new funds, investment banking also offers advice for a wide range of transactions a company might engage in.
Traditionally, banks either engaged in commercial banking or investment banking. In commercial banking, the institution collects deposits from clients and gives direct loans to businesses and individuals. In the United States, it was illegal for a bank to have both commercial and investment banking until 1999, when the Gramm-Leach-Bliley Act legalized it.
Through investment banking, an institution generates funds in two different ways. They may draw on public funds through the capital market by selling stock in their company, and they may also seek out venture capital or private equity in exchange for a stake in their company.
An investment banking firm also does a large amount of consulting. Investment bankers give companies advice on mergers and acquisitions, for example. They also track the market in order to give advice on when to make public offerings and how best to manage the business' public assets. Some of the consultative activities investment banking firms engage in overlap with those of a private brokerage, as they will often give buy-and-sell advice to the companies they represent.
The line between investment banking and other forms of banking has blurred in recent years, as deregulation allows banking institutions to take on more and more sectors. With the advent of mega-banks which operate at a number of levels, many of the services often associated with investment banking are being made available to clients who would otherwise be too small to make their business profitable.
Careers in investment banking are lucrative and one of the most sought after positions in the money-market world. A career in investment banking involves extensive traveling, grueling hours and an often cut-throat lifestyle. While highly competitive and time intensive, investment banking also offers an exciting lifestyle with huge financial incentives that are a draw to many people.
Advantages to Using an Investment Bank
They have financial savvy of the public and private markets versus the typical entrepreneur. Usually provide pricing, timing, and distribution ideas for the offering.
The investment banker takes the risk of distributing the securities. After the contract is signed, the banker is “on the line” for these issues.
Most investment bankers who underwrite also make a market in the security, therefore, supporting the stock in the marketplace.
Certain investment bankers raise the prestige of a company and can generate short-term financing just by their affiliation
Investment Banking Services
Mergers and Acquisitions — We manage the complete process for selling or buying a company or executing a merger between two companies. The Chessiecap Securities team is process driven and uses its senior-level strategy and technical resources to amplify critical steps in the M&A process, such as the development of quality presentation materials and the management of technical and operational due diligence.
Private Placements — We raise capital for clients across the entire spectrum of private equity funding sources, including early through later stage venture capital, mezzanine lenders, buyout firms, and strategic investors. Chessiecap Securities brings to a transaction a national investor network and the highest level of understanding of investors' criteria, preferences and structures to attract the capital that is right for your company. Our disciplined transaction approach manages and streamlines the entire financing process. We prepare management for the rigors of investor scrutiny and generate investor interest while allowing management to continue to run their business.
Divestitures — We help major corporations divest non-core assets that have value in the market either as standalone corporations or through a sale to other companies. The Chessiecap Securities divestiture process is detailed and rigorous. We begin by assessing the factors that may inhibit or enhance the process, including the viability of the technology in the open market, the standalone capability of management, and the post-transaction integration issues. Next, we advise corporate management on whether a divestiture, on all levels, is feasible. Finally, we help companies execute divestitures either by finding corporate buyers or securing financing to allow a spin-out to operate successfully on its own.
Restructuring and Financial Advisory — We enable clients to restructure and preserve valuable assets. Typical restructuring activities include management of the bankruptcy process, raising additional working capital, and negotiating revised financial terms with existing creditors. In addition, we often analyze and make detailed recommendations on how to reduce expenses internally, bolster marketing and sales efforts, and create a plan that demonstrates the potential of existing technology.
Valuations and Fairness Opinions — We bring a new level of diligence and precision to companies. In a regulatory environment that demands accountability, Chessiecap delivers valuations and opinions that are noted for their depth of understanding of the company and the industry. Our work becomes a reliable piece of the foundation in a transaction process.
WE ADAPT TO YOUR METHODS
We share your sense of urgency. As specialists we work with you to create a clear understanding of your needs. We work in concert with your decision-making process; we respect your need for a successful and timely transaction. WE KEEP YOU INFORMED
When appropriate, we provide more data about a decision to be made. We keep you accurately informed to help you manage the risks associated with all financial decisions, whether it be a debt or equity portfolio or a private transaction. In instances where specific in-depth industry or fractional knowledge is required, we call on professionals to help us pinpoint problems, important issues and opportunities.
WE SEEK YOUR AUTHORIZATION BEFORE ACTING
The policies and tactics we propose will be described clearly in a proposal for your approval.
WE REPRESENT YOU WITH DISCRETION
We maintain a policy of confidentiality on all the information about your enterprise with the exception of subjects you authorize us to discuss in pursuit of your objectives.
The best time to call us is before making a financial decision. In this case we offer an independent analysis of your situation and provide valuable advice and alternatives.
Whatever you are contemplating we stand ready to gather and organize the appropriate data and work with you to evaluate the effective alternatives identified. On your behalf we organize tasks and simplify complex issues.
After we have gathered information and analyzed your situation, we position and package a portfolio of financial opportunities.
With a decision to seek financial consultation we help establish the net present value of the subject investment and determine a value range for negotiation and decision. Given your situation we will perform independent analyses to provide a vehicle for evaluating alternatives.
The Investment Banking Group focuses on identifying, financing and advising emerging growth companies as they expand and develop into tomorrow’s market leaders. Roth is a leader in providing emerging growth companies with ready access to the capital markets and a wide variety of financial advisory services. By focusing exclusively on emerging growth companies, Roth has developed an unparalleled understanding of these companies, their entrepreneurial managers and their highly specialized financing needs. The Investment Banking Group features:
• 30 professionals with significant transaction and industry expertise
• A full spectrum of investment banking services including IPOs, Follow-ons / Registered Directs,
PIPEs , M&A Advisory and Debt Capital Markets
• An exceptional client focus that is characterized by long term relationships and a history of advising
clients on multiple transactions
• Deep domain expertise in technology, healthcare, financial services and consumer products
• Comprehensive aftermarket support backed by Wall Street award winning research and
a powerful distribution channel with the premier small-and micro-cap institutional investors
IPOs: .
Initial Public Offerings
The Hinduja Group builds strong relationships with its customers to fulfil their investment-banking and asset-management needs. Such relationships have to be based on :
Trust Which assures customers that their assets are safe.
Discretion Which ensures complete confidentiality
Reliability Through prompt and effective responses to customer needs and
Performance By consistently delivering the expected commercial results.
The Hinduja Group operates an independent global investment banking capability. The Investment Banking Division is broad based and has dedicated professional teams located in London, New York, Geneva and Mumbai.
This division has developed first hand commercial expertise in several key industry sectors around the world through the Hinduja group’s own businesses coupled with an excellent understanding of global capital markets.
We use our expertise and know-how to advise clients on strategies for growth, how to structure and execute mergers and acquisitions and underwriting capital requirements. For corporate clients looking to raise capital, we provide expert advice on the issuance of all forms of equity, bonds and other debt.
Through our brokers we have built strong relationships with corporations, institutional investors and individuals and we are therefore able to serve their brokerage requirements and at the same time provide them with accurate and up to date research.
With respect to institutional and individual investors, our performance in managing their assets is crucial to our success. The Asset Management business employs an “open architecture” system to deliver the full range of wealth management solutions for our clients. This enables us to run a customised investment platform that has the capability to offer asset allocation, risk analysis and selection of the best performing funds available, all backed up with personalised and quality service.
Overall, what distinguishes the Hinduja Group’s investment banking activities are:
• Quality of advice
• A clear understanding of clients’ needs
• Access to many capital sources
• Timely and efficient execution
Although the Investment Banking Division acts from time to time for certain group companies on an arms-length basis, its activities are focused on independent transactions with a broad range of regional and int
________________________________________
Investment bankers function as intermediaries in financial transactions. They are experienced in carrying out projects that, for most companies, take place very rarely, but are critically important.
The role of the Investment Bank
Investment banks provide four primary types of services: raising capital, advising in mergers and acquisitions, executing securities sales and trading, and performing general advisory services. Most of the major Wall Street firms are active in each of these categories. Smaller investment banks may specialize in two or three of these categories.
Raising Capital
An investment bank can assist a firm in raising funds to achieve a variety of objectives, such as to acquire another company, reduce its debt load, expand existing operations, or for specific project financing. Capital can include some combination of debt, common equity, preferred equity, and hybrid securities such as convertible debt or debt with warrants. Although many people associate raising capital with public stock offerings, a great deal of capital is actually raised through private placements with institutions, specialized investment funds, and private individuals. The investment bank will work with the client to structure the transaction to meet specific objectives while being attractive to investors.
Mergers and Acquisitions
Investment banks often represent firms in mergers, acquisitions, and divestitures. Example projects include the acquisition of a specific firm, the sale of a company or a subsidiary of the company, and assistance in identifying, structuring, and executing a merger or joint venture. In each case, the investment bank should provide a thorough analysis of the entity bought or sold, as well as a valuation range and recommended structure.
Sales and Trading
These services are primarily relevant only to publicly traded firms, or firms which plan to go public in the near future. Specific functions include making a market in a stock, placing new offerings, and publishing research reports.
General Advisory Services:
Advisory services include assignments such as strategic planning, business valuations, assisting in financial restructurings, and providing an opinion as to the fairness of a proposed transaction.
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 competitors. A quality investment banking firm can provide the services 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, and generally assisting in all phases of the project to ensure successful 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 industry segment. The investment bank should have a wide network of 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 have 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 the 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 details of the transaction, knowing that the transaction is being handled by individuals with experience in executing similar projects.
Stephen Graham and Andrew Hamilton, Graham, Hamilton & Company, Inc. (202-296-1789)
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Investment banks help companies and governments and their agencies to raise money by issuing and selling securities in the primary market. The sector takes the North American Industry Classification System (NAICS) code 523110. They assist public and private corporations in raising funds in the capital markets (both equity and debt), as well as in providing strategic advisory services for mergers, acquisitions and other types of financial transactions.
Investment banks also act as intermediaries in trading for clients. Investment banks differ from commercial banks, which take deposits and make commercial and retail loans. In recent years, however, the lines between the two types of structures have blurred, especially as commercial banks have offered more investment banking services. In the US, the Glass-Steagall Act, initially created in the wake of the Stock Market Crash of 1929, prohibited banks from both accepting deposits and underwriting securities; Glass-Steagall was repealed by the Gramm-Leach-Bliley Act in 1999. Investment banks may 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 brokerages and investment banks; this includes some of the best known financial services firms in the world.
In the strictest definition [citation needed], 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 few small firms solely provide this service. Almost all investment banks are heavily involved in providing additional financial services for clients, such as the trading of fixed income, foreign exchange, commodity, and equity securities. It is therefore acceptable to refer to both the "Investment 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 pension funds, mutual funds, hedge funds, 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.
Contents
[hide]
• 1 Raising capital in the capital markets
o 1.1 The main activities and units
• 2 Size of industry
• 3 Recent evolution of the business
• 4 Possible conflicts of interest
• 5 Investment banks
• 6 See also
• 7 External links
[edit] Raising capital in the capital markets
[edit] The main activities and units
The primary function of an investment bank is buying and selling products both on behalf of the bank's clients and also for the bank itself. Banks undertake risk through proprietary trading, done by a special set of traders who do not interface with clients and through Principal Risk, risk undertaken by a trader after he or she buys or sells a product to a client and does not hedge his or her total exposure. Banks seek to maximize profitability for a given amount of risk on their balance sheet[citation needed].
An investment bank is split into the so-called Front Office, Middle Office and Back Office. The individual activities are described below:
Front Office
• Investment Banking is the traditional aspect of investment banks which involves helping customers raise funds in the Capital Markets and advising on mergers and acquisitions. Investment bankers prepare idea pitches that they bring to meetings with their clients, with the expectation that their effort will be rewarded with a mandate when the client is ready to undertake a transaction. Once mandated, an investment bank is responsible for preparing all materials necessary for the transaction as well as the execution of the deal, which may involve subscribing investors to a security issuance, coordinating with bidders, or negotiating with a merger target. Other terms for the Investment Banking Division include Mergers & Acquisitions (M&A) and Corporate Finance.
• Financial Markets is split into four key divisions: Sales, Trading, Research and Structuring.
o Sales and Trading is often the most profitable area of an investment bank[citation needed], responsible for the majority of revenue of most investment banks[citation needed]. In the process of market making, traders will buy and sell financial products with the goal of making an incremental amount of money on each trade. Sales is the term for the investment banks sales force, whose primary job is to call on institutional and high-net-worth investors to suggest trading ideas (on caveat emptor basis) and take orders. Sales desks then communicate their clients' orders to the appropriate trading desks, who can price and execute trades, or structure new products that fit a specific need.
o Research is the division which reviews companies and writes reports about their prospects, often with "buy" or "sell" ratings. While the research division generates no revenue, its resources are used to assist traders in trading, the sales force in suggesting ideas to customers, and investment bankers by covering their clients. In recent years the relationship between investment banking and research has become highly regulated, reducing its importance to the investment bank.
o Structuring has been a relatively recent division as derivatives have come into play, with highly technical and numerate employees working on creating complex structured products which typically offer much greater margins and returns than underlying cash securities.
Middle Office
• Risk Management involves analysing the market and credit risk that traders are taking onto the balance sheet in conducting their daily trades, and setting limits on the amount of capital that they are able to trade in order to prevent 'bad' trades having a detrimental effect to a desk overall. Another key Middle Office role is to ensure that the above mentioned economic risks are captured accurately (as per agreement of commercial terms with the counterparty) correctly (as per standardised booking models in the most appropriate systems) and on time (typically within 30 minutes of trade execution). In recent years the risk of errors has become known as "operational risk" and the assurance Middle Offices provide now include measures to address this risk. When this assurance is not in place, market and credit risk analysis can be unreliable and open to deliberate manipulation.
Back Office
• Operations involves data-checking trades that have been conducted, ensuring that they are not erroneous, and transacting the required transfers. Whilst it provides the greatest job security [citation needed] of divisions within an investment bank, it is a critical part of the bank that involves managing the financial information of the bank and ensures efficient capital markets through the financial reporting function. The staff in these areas are often highly qualified [citation needed] and need to understand in depth the deals and transactions that occur across all the divisions of the bank. [1].
Technology
• 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. Technology has changed considerably in the last few years as more sales and trading desks are using electronic trading platforms. These platforms can serve as auto-executed hedging to complex model driven algorithms...
[edit] Size of industry
Global investment banking revenue increased for the third year running in 2005, to $52.8bn. This was up 14% on the previous year, but 7% below the 2000 peak. The recovery in the global economy and capital markets resulted in an increase in M&A activity, which has been the primary source of investment banking revenue in recent years. Credit spreads are tightening and intense competition within the field has ensured that the banking industry is on its toes.
The US was the primary source of investment banking income in 2005, with 51% of the total, a proportion which has fallen somewhat during the past decade. Europe (with Middle East and Africa) generated 31% of the total, slightly up on its 30% share a decade ago. Asian countries generated the remaining 18%. Between 2002 and 2005, fee income from Asia increased by 98%. This compares with a 55% increase in Europe, and a 46% increase in the US, during this period. [2]
[edit] Recent evolution of the business
Investment banking is one of the most global industries [citation needed], and is hence continuously challenged to respond to new developments and innovation in the global financial markets. Throughout the history [citation needed] of investment banking, many have theorized [citation needed] that all investment banking products and services would be commoditized. New products with higher margins are constantly invented [citation needed] and manufactured by bankers in hopes of winning over clients and developing trading know-how in new markets. However, since these can usually not be patented or copyrighted [citation needed], they are very often copied quickly by competing banks [citation needed], pushing down trading margins.
For example, trading bonds and equities for customers is now a commodity business [citation needed], but structuring and trading derivatives is highly profitable [citation needed]. Each OTC contract has to be uniquely structured and could involve complex pay-off and risk profiles. Listed option contracts are traded through major exchanges, such as the the CBOE, and are almost as commoditized as general equity securities.
In addition, while many products have been commoditized, an increasing amount of profit within investment banks has come from proprietary trading [citation needed], where size creates 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 21st century has been the vertical integration of debt securitization [citation needed]. 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 lender accepts loan payments and passes the payments on to the bondholders. This process is called securitization. However, lenders have begun to securitize loans themselves [citation needed], 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 [citation needed], making loans with the goal of securitizing them. In fact, in the areas of commercial mortgages, many Investment Banks lend at loss leader interest rates [citation needed] in order to make money securitizing the loans, causing them to be a very popular financing option for commercial property investors and developers [citation needed].
[edit] Possible conflicts of interest
Potential conflicts of interest may arise between different parts of a bank, creating the potential for financial movements that could be market manipulation. Authorities that regulate investment banking (the FSA in the United Kingdom and the SEC in the United States) require that banks impose a Chinese wall which prohibits communication between investment banking on one side and research and equities on the other.
Some of the conflicts of interest that can be found in investment banking are listed here:
• Historically, equity research firms were founded and owned by investment banks. One common practice is for equity analysts to initiate coverage on a company in order to develop relationships that lead to highly profitable investment banking business. In the 1990s, many equity researchers allegedly traded positive stock ratings directly for investment banking business. On the flip side of the coin: companies would threaten to divert investment banking business to competitors unless their stock was rated favorably. Politicians acted to pass laws to criminalize such acts. Increased pressure from regulators and a series of lawsuits, settlements, and prosecutions curbed this business to a large extent following the 2001 stock market tumble.[Citation Needed]
• Many investment banks also own retail brokerages. Also during the 1990s, some retail brokerages sold consumers securities which did not meet their stated risk profile. This behavior may have led to investment banking business or even sales of surplus shares during a public offering to keep public perception of the stock favorable.
• Since investment banks engage heavily in trading for their own account, there is always the temptation or possibility that they might engage in some form of front running
What is Investment Banking?
X
Close this window
Investment banking is a field of banking that aids companies in acquiring funds. In addition to the acquisition of new funds, investment banking also offers advice for a wide range of transactions a company might engage in.
Traditionally, banks either engaged in commercial banking or investment banking. In commercial banking, the institution collects deposits from clients and gives direct loans to businesses and individuals. In the United States, it was illegal for a bank to have both commercial and investment banking until 1999, when the Gramm-Leach-Bliley Act legalized it.
Through investment banking, an institution generates funds in two different ways. They may draw on public funds through the capital market by selling stock in their company, and they may also seek out venture capital or private equity in exchange for a stake in their company.
An investment banking firm also does a large amount of consulting. Investment bankers give companies advice on mergers and acquisitions, for example. They also track the market in order to give advice on when to make public offerings and how best to manage the business' public assets. Some of the consultative activities investment banking firms engage in overlap with those of a private brokerage, as they will often give buy-and-sell advice to the companies they represent.
The line between investment banking and other forms of banking has blurred in recent years, as deregulation allows banking institutions to take on more and more sectors. With the advent of mega-banks which operate at a number of levels, many of the services often associated with investment banking are being made available to clients who would otherwise be too small to make their business profitable.
Careers in investment banking are lucrative and one of the most sought after positions in the money-market world. A career in investment banking involves extensive traveling, grueling hours and an often cut-throat lifestyle. While highly competitive and time intensive, investment banking also offers an exciting lifestyle with huge financial incentives that are a draw to many people.
Advantages to Using an Investment Bank
They have financial savvy of the public and private markets versus the typical entrepreneur. Usually provide pricing, timing, and distribution ideas for the offering.
The investment banker takes the risk of distributing the securities. After the contract is signed, the banker is “on the line” for these issues.
Most investment bankers who underwrite also make a market in the security, therefore, supporting the stock in the marketplace.
Certain investment bankers raise the prestige of a company and can generate short-term financing just by their affiliation
Investment Banking Services
Mergers and Acquisitions — We manage the complete process for selling or buying a company or executing a merger between two companies. The Chessiecap Securities team is process driven and uses its senior-level strategy and technical resources to amplify critical steps in the M&A process, such as the development of quality presentation materials and the management of technical and operational due diligence.
Private Placements — We raise capital for clients across the entire spectrum of private equity funding sources, including early through later stage venture capital, mezzanine lenders, buyout firms, and strategic investors. Chessiecap Securities brings to a transaction a national investor network and the highest level of understanding of investors' criteria, preferences and structures to attract the capital that is right for your company. Our disciplined transaction approach manages and streamlines the entire financing process. We prepare management for the rigors of investor scrutiny and generate investor interest while allowing management to continue to run their business.
Divestitures — We help major corporations divest non-core assets that have value in the market either as standalone corporations or through a sale to other companies. The Chessiecap Securities divestiture process is detailed and rigorous. We begin by assessing the factors that may inhibit or enhance the process, including the viability of the technology in the open market, the standalone capability of management, and the post-transaction integration issues. Next, we advise corporate management on whether a divestiture, on all levels, is feasible. Finally, we help companies execute divestitures either by finding corporate buyers or securing financing to allow a spin-out to operate successfully on its own.
Restructuring and Financial Advisory — We enable clients to restructure and preserve valuable assets. Typical restructuring activities include management of the bankruptcy process, raising additional working capital, and negotiating revised financial terms with existing creditors. In addition, we often analyze and make detailed recommendations on how to reduce expenses internally, bolster marketing and sales efforts, and create a plan that demonstrates the potential of existing technology.
Valuations and Fairness Opinions — We bring a new level of diligence and precision to companies. In a regulatory environment that demands accountability, Chessiecap delivers valuations and opinions that are noted for their depth of understanding of the company and the industry. Our work becomes a reliable piece of the foundation in a transaction process.
WE ADAPT TO YOUR METHODS
We share your sense of urgency. As specialists we work with you to create a clear understanding of your needs. We work in concert with your decision-making process; we respect your need for a successful and timely transaction. WE KEEP YOU INFORMED
When appropriate, we provide more data about a decision to be made. We keep you accurately informed to help you manage the risks associated with all financial decisions, whether it be a debt or equity portfolio or a private transaction. In instances where specific in-depth industry or fractional knowledge is required, we call on professionals to help us pinpoint problems, important issues and opportunities.
WE SEEK YOUR AUTHORIZATION BEFORE ACTING
The policies and tactics we propose will be described clearly in a proposal for your approval.
WE REPRESENT YOU WITH DISCRETION
We maintain a policy of confidentiality on all the information about your enterprise with the exception of subjects you authorize us to discuss in pursuit of your objectives.
The best time to call us is before making a financial decision. In this case we offer an independent analysis of your situation and provide valuable advice and alternatives.
Whatever you are contemplating we stand ready to gather and organize the appropriate data and work with you to evaluate the effective alternatives identified. On your behalf we organize tasks and simplify complex issues.
After we have gathered information and analyzed your situation, we position and package a portfolio of financial opportunities.
With a decision to seek financial consultation we help establish the net present value of the subject investment and determine a value range for negotiation and decision. Given your situation we will perform independent analyses to provide a vehicle for evaluating alternatives.
The Investment Banking Group focuses on identifying, financing and advising emerging growth companies as they expand and develop into tomorrow’s market leaders. Roth is a leader in providing emerging growth companies with ready access to the capital markets and a wide variety of financial advisory services. By focusing exclusively on emerging growth companies, Roth has developed an unparalleled understanding of these companies, their entrepreneurial managers and their highly specialized financing needs. The Investment Banking Group features:
• 30 professionals with significant transaction and industry expertise
• A full spectrum of investment banking services including IPOs, Follow-ons / Registered Directs,
PIPEs , M&A Advisory and Debt Capital Markets
• An exceptional client focus that is characterized by long term relationships and a history of advising
clients on multiple transactions
• Deep domain expertise in technology, healthcare, financial services and consumer products
• Comprehensive aftermarket support backed by Wall Street award winning research and
a powerful distribution channel with the premier small-and micro-cap institutional investors
IPOs: .
Initial Public Offerings
The Hinduja Group builds strong relationships with its customers to fulfil their investment-banking and asset-management needs. Such relationships have to be based on :
Trust Which assures customers that their assets are safe.
Discretion Which ensures complete confidentiality
Reliability Through prompt and effective responses to customer needs and
Performance By consistently delivering the expected commercial results.
The Hinduja Group operates an independent global investment banking capability. The Investment Banking Division is broad based and has dedicated professional teams located in London, New York, Geneva and Mumbai.
This division has developed first hand commercial expertise in several key industry sectors around the world through the Hinduja group’s own businesses coupled with an excellent understanding of global capital markets.
We use our expertise and know-how to advise clients on strategies for growth, how to structure and execute mergers and acquisitions and underwriting capital requirements. For corporate clients looking to raise capital, we provide expert advice on the issuance of all forms of equity, bonds and other debt.
Through our brokers we have built strong relationships with corporations, institutional investors and individuals and we are therefore able to serve their brokerage requirements and at the same time provide them with accurate and up to date research.
With respect to institutional and individual investors, our performance in managing their assets is crucial to our success. The Asset Management business employs an “open architecture” system to deliver the full range of wealth management solutions for our clients. This enables us to run a customised investment platform that has the capability to offer asset allocation, risk analysis and selection of the best performing funds available, all backed up with personalised and quality service.
Overall, what distinguishes the Hinduja Group’s investment banking activities are:
• Quality of advice
• A clear understanding of clients’ needs
• Access to many capital sources
• Timely and efficient execution
Although the Investment Banking Division acts from time to time for certain group companies on an arms-length basis, its activities are focused on independent transactions with a broad range of regional and int
[email protected]
New member
pls help me for 100 marks project bank as an intermediatries
an pls tell me how can i download attach files
pls send its urgent
an pls tell me how can i download attach files
pls send its urgent
[email protected]
New member
i need a 100 arks project on bank as an intermediatries
kiran menon
New member
hi... my project is on asset liablity management... so if u have any info then pllzz let me knw....
parvathi_19_n
New member
i m doing my project on RETAIL BANKING...if anybody could help me wid some relavent information...thankx
jainbhaveshdilip
Par 100 posts (V.I.P)
hi
i told u about portfolio management services... remindin u again
i told u about portfolio management services... remindin u again
felroydsouza
New member
hey I am new to this site , but it would be nice of you if you could guide me as to how I could get some references on logistics like a DHL or may be a UB group.
Thanks
Felroy
Thanks
Felroy
jainbhaveshdilip
Par 100 posts (V.I.P)
can u plz help me with nproject on portfolio Management service in India...
Plzzzzzz
Plzzzzzz
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