Investment banking helps companies and governments raise capital and manage large financial transactions. It supports businesses during major financial events such as capital raising, mergers, and acquisitions. The blog covers types of investment banking and the top investment banks in India.
Table of Content
What is Investment Banking?
Investment banking is closely related to corporate finance, but it is not the same as it. It essentially offers corporations and governments advice on how to combine or acquire other businesses, generate revenue, and reshape their operations to be more successful and efficient.
It primarily helps in merging two companies or acquiring a smaller company. Investment banks also help raise money through equity and debt by issuing shares or bonds in the capital markets.
Restructuring is one of the major roles of investment banks, where the bankers analyze the structure of the business. Then they decide what changes are required to improve performance in that business to make it more effective.
Investment Banking Course
Get Practical Training to Become an Investment Banker!
How is Investment Banking Achieved?
- Investment banking is carried out by skilled professionals who have a proper skill set that they apply in their respective roles and responsibilities. Here are some of the important tasks done by investment bankers for their specified bank:
- The bank provides its customers with expert investment bankers who assist clients in planning and executing major financial transactions.
- They evaluate financial data, market trends, and risks before advising clients.
- They structure deals in a way that reduces risk and offers more value.
- Investment bankers identify new business opportunities, approach potential clients, negotiate terms, finalize transactions, and manage deals from beginning to end.
- They regularly check market conditions to make informed decisions.
Qualities of Investment Bankers
The qualities of a good investment banker are not limited to a specific degree. The following qualities define a strong investment banker.
- Strong numerical and analytical skills
- Communicating and interpersonal skills
- Problem-solving skills
- Teamwork and team leadership skills
- Project and time management skills
- Adaptability and collaboration skills
Watch this video to understand how investment banking works and what a career in the field really looks like.
Types of Investment Banking
There are four types of investment banking listed below. We will look at each one briefly, understanding each type with the help of examples.
1. Bulge Bracket Banks
The Bulge Bracket Bank covers the largest and most recognized investment banks throughout the world. They have the highest brand values among other banks. Banks in this category include Goldman Sachs, JP Morgan, Morgan Stanley, and others. Bulge Bracket Banks have offices in major financial hubs globally, making their network strong with various major clients around the world.
- They provide financial services for huge investments, advising, and research.
- These banks typically categorize their investment banking division into product groups and coverage groups. They are well-known outside the finance industry.
- They focus on huge projects rather than working on smaller ones, making sure that any sector that is seeking their assistance is asking for large and complex transactions across industries.
- Their primary goal is to offer a wide range of financial services, including advising and analysis.
- The deals for these types of banks should be of huge amounts in the range of over $1 billion or even greater.
- These banks are the biggest investment banks with the largest corporations and governments as clients.
2. Elite Boutique Banks
If you are looking for a higher-pay for an investment banking analyst, these banks are worth considering. Lazar LLC, Moelis & Company, and Evercore Group LLC are known as Elite Boutique Banks.
- They tend to give higher salaries to their employees as compared to any other bank, not even the Bulge Bracket, which has the highest brand value.
- They specialize in specific advisory services.
- They may not have as many offices as a Bulge Bracket Bank, but operate in key financial centres.
- Different Elite Boutiques will focus on single services, say if one elite bank is providing a service of advising, the other will be concentrating on capital restructuring.
- Getting focused advisory mandates from their clients is their primary goal, with a deal size of $1 billion, making them a competitor of the Bulge Bracket.
3. Regional Boutique Banks
Regional Boutique Banks are those that handle smaller transaction sizes. The deals they handle are usually less than the size of $10 million.
- They usually assist the companies with the work of loan financing.
- Marlin & Associates, Financo, and KLR Group are the banks that fall under this category.
- These types of banks are not specialized in any specific product or in any specific sector.
- They work on different projects and different clients from different sectors, but in smaller cities that have quite local companies or organizations.
- These banks have strong connections and networks within a particular location; they do not focus on clients who are outside their specific geographic region.
4. Middle Market Banks
Middle Market Investment banks focus on mid-sized businesses to get financial advice and assistance. Employees can build strong regional networks. It focuses on the middle market customers and the finance that surrounds its office.
- They do not have as much brand value as the previously mentioned banks have. It focuses on middle-market customers and finance.
- Jefferies, Macquarie, and RBC Capital Markets are the banks that work as Middle Market Banks.
- These types of banks are categorized as those that deal in transactions of $500 Million to $1 Billion.
- They usually target clients who are too big for the Regional boutique type or too small for the Bulge Bracket type.
- They do not serve a wide area but are under a specific spread and may have limited international presence. Mid-sized businesses are the main clients of these banks.
Get 100% Hike!
Master Most in Demand Skills Now!
Top Investment Banks In India
The banking sector began developing in India in the 19th century. That was a start for the banks to set their foot, and now, India has leading investment banks that are listed below:
- SBI Capital Markets Ltd.
- ICICI Securities Ltd.
- Axis Bank Ltd.
- HDFC Bank Ltd.
- Credit Suisse Securities (India) Private Ltd.
- Deutsche Equities India Private Ltd.
- Edelweiss Financial Services Ltd.
- HSBC Securities & Capital Markets (India) Private Ltd
- IDBI Capital Market Services Ltd.
- JP Morgan India Private Ltd.
Conclusion
Each type has advantages and disadvantages for its employees. Choosing the right type of investment bank depends on the size of the deal, the services required, and the industry focus.
If you want to work in these banks, you have to check the different constraints. For example, if you want to choose a bank for its brand value, exposure, great exit opportunities, and decent salary, then you can choose a Bulge Bracket Bank.
However, if reasonable pay is not enough for you, then you should go for the banks that have lower brand recognition, as they offer higher salaries and incentives. Pursuing Online CFO Training can also enhance your understanding of the industry and increase your chances of landing a role in these banks.
Master Investment Banking interviews with expert-curated questions!
Frequently Asked Questions
Q1: What are the main types of investment banking services offered in India?
The main services include mergers and acquisitions (M&A) advisory, underwriting of stocks and bonds, IPO management, corporate restructuring, and financial advisory for companies. Indian banks also offer wealth management and project finance.
Q2: What are the primary divisions within investment banking?
The main divisions are: (1) Front office (client-facing work like trading and advisory), (2) Middle office (risk management and compliance), and (3) Back office (operations and technology support).
Q3: Which investment banks in India specialize in mergers and acquisitions advisory?
Top M&A advisors include ICICI Securities, Kotak Investment Banking, Axis Capital, and global firms like Goldman Sachs and JP Morgan that operate in India. These banks have dedicated teams for deal-making.
Q4: What types of investment banking divisions handle IPOs and public offerings?
The Capital Markets or Equity Capital Markets (ECM) division manages IPOs and public offerings. This team works under the front office and coordinates with sales, trading, and research teams.
Q5: Who can benefit from investment banking?
Large corporations, governments, institutional investors, and high-net-worth individuals benefit most. Companies use these services for raising funds, buying other businesses, or going public.