Did you enjoy the lifestyle of Farhan Akhtar in the movie Rock On and want to see yourself in the same position?
Let me tell you that he was an investment banker in the movie.
Pursuing a career in investment banking can fetch you good money and has a really bright future.
But do remember with roses comes the thorns and this career also involves a good amount of labor to become a successful investment banker.
However, nothing is impossible if you are dedicated and passionate.
What is an Investment Bank?
Let’s understand what is Investment banking all about?
An investment bank is a specific segment of the banking that assists companies, governments and other entities in raising capital through underwriting or through the issuance of securities or a combination of both.
It also helps entities in mergers and acquisition (M&A) and other ancillary services like derivative trading, issuance, and placement of stocks etc.
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Various roles as an Investment Banker:
You can work as an investment banker in different capacities which are discussed below-
- Underwriting is one of the primary functions of investment banks which helps in raising capital for companies and governments through the issuance of equity, and debt.
- You can work in the Mergers and Acquisition (M&A) department, which gives strategic guidance to companies to merge or acquire another company. They advise buyers and sellers on business valuation, pricing and structuring of a transaction, negotiation, and implementation. These people possess a specialized skill to make sure that such deals really makes sense and is viable for the company in the long run.
- Private Equity is one of the most prestigious jobs in today’s time. It involves investment in asset class comprising of debt and equity in companies which are not listed on the stock exchange. Some of the popular private equity firms include KKR and Blackstone.
- Venture Capital shares similarity with private equity firms, but the only difference is that they provide capital to startup companies while private equity deals with established firms. Becoming a venture capitalist requires a special set of skills as their role involves picking companies which are at the nascent stage but have huge potential going forward. The chances of failure are very high for most of the companies, but few winners are enough to outweigh a large number of losers.
- Equity research is one of the important arms of Investment Banking. They come with buy and sell side research which helps to facilitate the trading of securities. Their reports are usually meant for internal use, but they may sell it to hedge funds or mutual fund managers so as to generate additional revenue.
- Some firms also engage in proprietary trading. It’s a trading desk which gives a platform to the traders to trade in different securities like equity, bonds, currencies or commodities with firm’s own money as compared to the depositor’s money.
- They also play the role of Asset Management company where they manage huge portfolios for their clients including insurance companies, pension funds, etc. They help their clients in achieving their goals using the right mix of various instruments like equity, bonds, real estate etc in their portfolio.
Though investment banking is a prestigious job and can fetch you good payoff, make sure you are ready for the intense competition to get into it and also ready to work for long hours.
There is one misconception that you got to have a finance background to become an investment banker.
Investment banker usually comes from different backgrounds including a bachelors degree in finance, mathematics, physics, computer science, etc.
However, a good base in mathematics is very important.
Set of Skills Required
Entry into an Investment banking career is usually not possible without a degree, preferably a CFA or an MBA from Top B-Schools.
However getting into it is based on competence and you got to possess various skills to qualify for investment banking role.
Some of the qualities are mentioned below-
a. Strong number crunching and analytical skill
b. Good communication skill
c. Leadership quality
d. Excellent in teamwork
e. Able to work under pressure and to handle stressful situations
Know More: Which course to opt for- MBA or CFA?
Employers also look for general market awareness and knowledge of the financial market.
Some of the well known Investment Banks include Goldman Sachs, Morgan Stanley, Barclays, Morgan Stanley, HSBC, Credit Suisse etc.
So if you believe that you possess the above qualities and aiming to build a career in Investment Banking, you should look forward to doing CFA or an MBA program.
However, if you are not willing in the certification program and just looking forward to building a knowledge base, you can probably opt for a course in Elearnmarkets which offers courses like equity research analysis, financial modeling and much more.
Wish you all the best if you planning to pursue your career in Investment banking.
Take care and keep learning!!