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INTRODUCTION
Investment Banking as the term suggests, is concerned with the primary function of
assisting the capital market in its function of capital market intermediation, i.e. the movement
of financial resources from those who have them means investors, to those who need to make
use of them means issuer for generating profit. Banking & financial institutions on the one
hand & capital market on the other hand are two broad Platforms of institutional
intermediation for capital flows in the economy. Therefore, it could be inferred that
investment banks are those institutions that are the counterparts of banks in the capital market
in the function of intermediation in resources allocation. Investment banks carried on various
activities it helps companies and governments and their agencies to raise money by issuing
and selling securities in the primary market. 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 expansion
transactions.
Investment banking is much wider term than merchant banking as it implies significant fund
based exposure to the capital market. Internationally, investment banking have progressed
both in fund based & fee based segments of industry. In India, the dependence is heavily on
merchant banking, more particularly with issue management & underwriting. However
downturn in primary market has forced merchant banks to diversify & become full fledged
investment banks. Over the decades, backed by evolution & also fuelled by recent
technological developments, investment banking has transformed repeatedly to suit the needs
of the finance community & thus become one of the vibrant & exciting segments of financial
services. The future for investment banks is bright with scope for merchant banks to convert
themselves into investment banks. Much of the investment banking in its present form, thus
owes its origins to the financial market in U.S.A due to which, American investment banks
have been leader in the American & Euro market as well. Therefore, the term investment
banking can be said to be American origin. Their counterparts in U.K were termed as
merchant banks since they had confined themselves to capital market intermediation until
the U.K & European markets & extended the scope of such businesses.
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Mahindra, Citibank & other offer almost whole of investment banking services
permitted in India. Among these, the long term financial institutions transforming themselves
into full service universal banks. They also have full service investment banking under their
fold. Other entities such as NBFCs or subsidiary of public sector banks mainly offer
merchant banking & corporate advisory services. There are also several others who are
providing only corporate advisory services but prefer to hold merchant banking or
underwriting.
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Wide & narrow geographical presence like global & local firms.
The activities of an investment banks depend upon the service provided. The services
provided by an investment bank can be broadly given below~
Fund Based
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Book-running
Project financing,
Syndicate loan
Venture capital
Private equity
Financial restructuring
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Underwriting
Market making
Stock broking
Derivative product
Portfolio Management
Equity research
Fund Based
Venture capital
Private equity
Asset management
industry to
consolidate.
The intitutionalisation of corporate acquisitions by SEBI through its guidelines, popularly
known as the Takeover Code.
One of the cream activities of investment banks has always been M&A advisory. The larger
investment banks specialize in M&A as a core activity. While some of them provide pure
advisory services in relation M&A, other valid merchant banking licences from SEBI also
manage the open offers arising out of such corporate events.
The investment bankers play the role of an advisor in M&A deal. The financing capability of
the investment banks is beginning to play a crucial role in securing the goal. Those firms that
have networks with banks & other financial institutions & thereby can provide finance or
have necessary resources to finance the deal themselves a better chance of success of deal.
Investment banks thus helps in finding a buyer/seller, in working out the terms of the
transaction, financing the structure, arranging bridge loans. It is necessary that the M&A
group keep a close watch on the various industries, companies in order to identify the
potential M&A candidate. Similarly, close relationship with the securities research people,
traders also help to identify the companies vulnerable to takeovers. The task of doing M&A
deals begins with analyzing & structuring the transaction. This comprises of analyzing the
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Full service brokers provide a whole range of services, including giving specific
investment advice. They keep close tracks of the markets & keep the client abreast of
opportunities that suit their objective. They also offer detailed about the clients financial
picture, structure & monitor the assets, make recommendations about investments &
implement the transactions about investments & implement the transactions as required.
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Discount brokers are called so because they generally charge lower fees than the full
service brokers do. Investors who like to do their own research & make their own
decisions use discount brokers. Discount brokers offer little or no advice & merely
execute the transaction as ordered.
Retail segment
Institutional segment
The salespersons at the investment banks have counterparts at the institutions. These
counterparts are normally referred to as buy- side analysts or portfolio managers. If the
investment banks analyst is respected, they also act as sell-side analyst, as a part of
investment decision.
Retail segment
Investment banks act as an advisor to his clients. He is more multi-market oriented & can
recommend stocks as well as bond unlike specialists in the institutional product group.
Research
The research operations of an investment bank are concerned with studying the economic
trends, industry developments, & individual companies stocks & providing proprietary
investment advice to the institutional clients, & to its sales & trading divisions. The research
division is also an important part of the underwriting process, both in attracting the clients by
their knowledge of clients industry & in providing a critical link to the institutions that own
the clients stocks once the stocks is publicly traded. An efficient research team provides an
information advantage to the investment banks that can use it for in-house trading purpose &
also can use for the benefit of their clients.
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Equity Research
The Equity Research division of a securities house or investment bank provides in-depth
stock market analysis & a broad perspective & knowledge regarding the industry trends.
They also provide an insight into the including valuation of quoted companies & evaluation
of companies prospects. The research evaluations usually include:
Industry evaluations, which analyze the trends in the industry, compare the companys
performance to the industry averages.
Company evaluations that examine the particular company, its financial position, its
securities from an investment perspective & thereby recommend a buy/ hold/ sell
decisions.
Technical analysis that focuses on the performance of the securities in the various
markets.
Portfolio analysis that helps to manage the clients investment objective with a suitable
investment program.
Fixed-income research
The fixed income research division provides research focus on the instruments like corporate
debt including investment grade debt, high-yield debt, corporate & portfolio strategy
derivatives, mortgage backed securities, asset backed securities. Fixed- income research is
considerably more quantitative than equity research. The analysts in this division assess the
fairness of the spreads between the fixed- income instruments of different maturities &
different risk classes & makes trading recommendations based on the deviations from the fair
spreads, estimate the value of the options in the mortgages & mortgage backed products.
Institutional investing
Institutional investors have been a recent phenomenon in the Indian capital market, Which till
then had the presence of a handful of public financial institutions such as the & the insurance
companies. The term lending institutions such as the IFCI did not participate in secondary
market dealing as a matter of policy. With the advent of liberalization, there are presently a
large number of domestic institutional investors in the secondary market apart from approved
foreign institutional investors. In addition, institutional investment have risen significantly in
the primary markets through venture capital & private equity investments by investors in both
the domestic & non- resident categories. Several of the leading investment banks either have
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Technical Skill
Academic Background- In the early days of investment banking, not much importance
was attached to academic background. Today, the business has become very complicated
and the skill requirements have multiplied. Consequently, investment banks find it
important to recruit people with the right academic credentials. Typically, for most of the
important jobs, an MBA is a must. Investment banks rely heavily on campus recruitments
Conceptual Soundness- One of the major benefits for a professional in an investment
bank is the learning associated with work. The financial skills of an expert are tested to
the core while handling a complicated deal. Comprehensive and in-depth knowledge of
financial and business concepts are essential to sustain business. Multiple relationships
between various factors render decision-making difficult. Financial solutions can be
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Legal Knowledge- While clear cut guidelines can be issued to the traders regarding their
market related activities that are governed by the law, the complexity multiplies for an
M&A deal. The regulators guidelines have to be strictly followed, even while envisaging
a combination. Legal knowledge is also important for structuring such deals, which will
help identify the constraints associated with proposed solution. The situation gets more
intense when the deal is a cross-border M&A proposal. Apart from the knowledge of the
inland laws, foreign laws also have to be considered. Any regulation by the foreign
government can make an otherwise desirable deal, unviable.
Knowledge of Capital Markets and Functioning- More than any other industry, it is the
investment banking industry that has a direct bearing on the way capital markets function.
Any changes in the capital market regulations affect the brokerage side of the business,
along with the trade clearing and settlement houses. The trading personnel should be
conversant with the regulations, guidelines, procedural formalities and actual trade
execution processes involved in capital market. E.g. Trading system involves a lot of
additional skills than online trading. He has to be conversant with the codes, symbols and
conventions followed by the market. Quick signaling and accurate interpretation are of
utmost significance. Any mistake in these would lead to faulty execution of orders and
might entail additional costs to the firm in correcting the errors.
Knowledge of Regulatory Bodies involved in the Various Operations- It is necessary
for an investment banker to be aware of all the regulatory bodies that govern the activities
in which he/she is involved. A thorough knowledge of all such bodies is absolutely
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Communication Skills
Ability to Cater to the Audience According to its Awareness LevelsCommunication skills include both the means of communication written and oral.
However, the audiences vary extensively, and hence, the requisite communication skills
also differ widely. A marketer handling individual investors will necessarily have to keep
the content very simple and express t in laymans terms. Usage of financial terms &
jargons will not fetch results. Cash flows, the characteristics of the instruments & the risk
class to which the investment belongs to must be explained in simple & easily
understandable terms.
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savings will definitely like to earn something out of it rather keeping the funds idol. So
the question of investment arises and with the investment risks arises. So for proper and
safe deployment of funds investment bankers help them in the process of investing their
funds.
2) Role of investment bankers: The investment bankers act as an intermediary between the
investors and capital market which consists of primary market and secondary market. The
investment bankers with their intense research guide them to invest their money in
banks/FI, Capital and money market, foreign exchange market, commodity market, real
estate/gold etc. Proper deployment of funds will help the investors to earn good returns
with safety of their initial invested funds.
3) Business Activity: All these investments from the investors will lead to business activity
in different sectors. The funds deployed by the investors will be utilized by the users of
the deployed funds will lead production of goods and services in the economy.
4) Twin Advantage: The investors will not only earn returns, capital appreciation etc but also
they will utilize the goods and services produced by the users of the deployed funds. This
will in return create satisfaction in the minds of consumer/investor and will also earn
profits for the user of the funds because of utilization of goods and services. This will be a
win-win factor and also will develop the economy as a whole.
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1) Investors: Investors are the persons who generate savings. The investors who generate
economy)
(fnancial
Commodity futures Market (fnancial
Capital
Market / Money Market
etc (real economy)
Real Estate
/ Goldeconomy)
EXPLANATION
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Institutional Business
This division primarily covers secondary market broking. It caters to the needs of foreign and
Indian institutional investors in Indian equities (both local shares and GDRs). The division
also incorporates a comprehensive research cell with sectoral analysts who cover all the
major areas of the Indian economy.
Private Client Services (PCS) is a special investment division for High Net-worth individuals,
retail investors, Non-Resident Indian investors, trusts, corporates and banks. The investment
product range at PCS is among the widest in the country and covers debt and equity, mutual
funds and specialised structured investment products.
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Depository Services
ICICI Securitiesis a depository participant with the National Securities Depository Limited
and Central Depository Services (India) Limited for trading and settlement of dematerialized
shares. Since it is also in the broking business, investors who use its depository services get a
dual benefit. They are able to use its brokerage services to execute transactions and its
depository services to settle these.
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5, 00,000/- and
Rs. 10, 00,000/- as margin. This can be in form of cash deposit or the value of the shares you
would have currently.
ICICI Privilege Circle Account
ICICI Securities offer you nothing but the best. At ICICI SECURITIES, they make sure you
get to enjoy premier and top-line trading services - with ICICI Securities Privilege Circle
Your benefits:
A dedicated Privilege Circle customer service desk offers you assistance in
opening accounts, handling day-to-day problems, and more.
Independent market expertise and support through a dedicated relationship
manager.
Place orders phone through Call & Trade.
Access to Easy IPO and 14 top-performing mutual funds through Easy Mutual
Funds.
Their Research Reports on the economy, select industries and companies.
Research advice via ICICI Securities SMS alerts, so you don't miss out on
important market movements.
6 times exposure on the margin.
Access to K.E.A.T Premium - an exclusive premium analysis tool with 52
Indicators for Technical Analysis, Derivative Chains, Multiple Watchlists, and
more.
Lowest delayed payment interest.
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Your benefits:
4 times exposure on the margin.
Access to K.E.A.T Desktop - specialised financial software that makes trading
easier.
Intra day calls from our experts for a nominal fee.
Their Research Reports on the economy, select industries and sectors and
companies.
Research advice via ICICI Securities SMS alerts, so you don't miss out on
important market movements.
Free news and market updates.
Access to 14 top-performing mutual funds through Easy Mutual Funds.
Place a paper-free order for IPO, through Easy IPO.
How to activate?
You can activate ICICI Securities Freeway with any amount less than Rs.
1, 25,000/- as
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