An investment bank is not your typical bank that you may find across the street. These banks neither take deposits in a savings account nor provide loans to customers.
IBs(Investment Banks) aid in sale of securities such as bonds and guide companies during mergers and acquisitions.
Many IBs also offer advisory services for large stock placements and IPOs.
For instance, the Mukesh Ambani led Reliance Industries shares in 2020, had done a rights issue worth Rs.53000 Crores. For this they hired a number of Investment Banks such as ICICI Securities, Goldman Sachs and JM Financials. Each had a specific role to play.
Before understanding how to make a career in Investment Banking, we must know what is the role of an investment banker.
Role of an Investment Banker
- Investment bankers are advisors to companies when it comes to buying or selling of securities.
- They advise the buy side companies on various aspects such as the ideal price of the investment, company valuation, final negotiations and strategy formulation.
- They also look into the legal aspects of the mergers and acquisition processes.
- Similarly they advise the sell side companies on the type of securities to issue, stocks or bonds, the valuation of the issue and help in finding buyers for the issue.
- They also assist companies going for an IPO with their valuation models.
Since your job would be to handle transactions of huge amounts, there is little room for error.
Companies such as Goldman Sachs, HSBC, JP Morgan and ICICI Securities are amongst the top Investment Banks in the world.
In order to secure a job at such firms, you need to have extensive qualifications.
Now, to make the career in investment banking, here are few of the pre-requisites:
- A finance/commerce related degree – This could be your usual Bcom or BBA degree which would be the starting point for your career in IB. Getting through a top college will be a major bonus and add value to your CV.
- Advanced or specialised degrees such as CA & CFA– This really shows companies how passionate you are about joining IB. Having a specialised degree in a particular field always helps.
- Post-Graduation – This basically means having an MBA in Finance. If you can crack the CAT/GMAT examinations and get yourself a seat in a top IVY league like IIM or Harvard, you can easily get hired from your college campus itself.
Apart from extensive educational qualifications, companies look for:
- Very well experienced candidates
- Incredibly bright and candidates with high IQ, which they determine from the rigorous interview rounds.
- Great social and leadership skills.
Always be on the lookout for networking with ex or current employees of the firm that you wish to apply to. Doing this can mean a world of difference on selection day.
The average salary of an Investment Banker in India can range between Rs.25 Lakhs to Rs.50 Lakhs per annum after a few years of work experience.
It gets even merrier if you can manage to get a job in Wall Street in the USA, where you can make at least $125,000 as a base salary and upto $10 Million as a managing director.
So to sum up, if you have the stomach for working for 80 hours a week and the will for working hard to get the best education, the world of capital markets will open many doors for you. After all that, through your networking and interpersonal skills you can land one of the highest paying jobs in the world – an Investment Banker.
With the kind of respect and salary you earn in such a position, you can easily expect to achieve financial independence at a very early age. After which you can fulfil all your passions and drive around in a Porsche!
Raghav Agarwal is a graduate in Business Administration. With a keen interest in the world of financial markets, he loves to read and write about various financial instruments. Currently he is working with Elearnmarkets.com as a member of the Knowledge team.