Kartik Chell Dissertation

INVESTMENT BANKING IN INDIA
IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR POST GRADUATE DIPLOMA IN MANAGEMENT

2010-12
ROLL NO. 27
UDAI INSTITUTE OF MANAGEMENT STUDIES, JAIPUR, RAJASTHAN
DECLARATION
I hereby declare that this report, submitted in partial fulfillment of the requirement for the award for the post graduate diploma in management, to udai institute of management studies is my original work and not used anywhere for award of any degree or diploma or fellowship or for similar titles or prizes. Place : Jaipur Date : --------------------------------Signat ure
1 | Investment Banking in India
PROJECT GUIDE CERTIFICATE FORM

I KARTIK CHELL the undersigned Roll No. 27 studying in the Final year of PGDM is doing my project work under the guidance of Mr. VISWAS GUPTA .
____________________________ Signature of the Candidate
__________________________ Signature of Internal Guide
INDEX
SR NO.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
PARTICULAR
EXECUTIVE SUMMARY OBJECTIVE RESEARCH METHODOLOGY DATA COLLECTION INTRODUCTION DEFINITION REGISTRATION OF INVESTMENT BANK GRANT OF CERTIFICATE REGISTRATION CHARGES CONDITION OF REGISTRATION CODE OF CONDUCT OFFERING AND SERVICES OF INVESTMENT BANK ORGANISATION STRUCTURE CHINESE WALL CONCEPT CASE STUDY : ADANI POWER IPO CASE STUDY : ICICI SECURITIES CONCLUSION BIBILIOGRAPHY
PAGE
3 5 6 7 8 9 9 10 11 11 12 16 19 24 25 37 52 53
EXECUTIVE SUMMARY
The project on Investment Banking in India has been undertaken with a view to study the overall investment banking industries in India and their products offering, services , operations , client management systems and other part of the industry. In the above study, I have highlighted the key regulatory parameters regarding Investment banks like Definition of Investment Banks, Registration of Investment Banks, Code of Conducts for Investment Banks, Grant of Certificate, Registration Charges, Conditions of Investment Banks & Function of Investment Banks. IPO Management is the one of the main function of Investment Banks, so in the project I have taken Live cases like Adani Power IPO & ICICI Security as IB for Case Study.
In ICICI Securities I had personally visited following department and find out the process of their Role of their respective department. 1. 2. 3. 4. 5. 6. 7. 8. 9. Mutual Fund Operations Risk Operations DBC Operations Human Resource, Legal & Compliance Product Advisory Group Equity advisory group Sales Channles Operation Control Analytics & Marketing
OBJECTIVE The main objective of the project is to :

1.
Study the overall view of the Indian Investment Banks. Study the Regulatory Requirement for Registration of Investment Banks.
2.
3.
Know the Revenue (Brokerage / Commission) Generation Pattern of the Investment Banks.
4.
Know the Pre-Issue & Post Issue Management of IPO & Process.
RESEARCH METHODOLOGY
The research methodology used for the project report is descriptive and research is based on the Primary and Secondary data sources. These include ADANI Power IPO & Offline IPO Bidding Manual Published by ICICI Securities at the time of IPO for its Various Sales Channels like Sub-Broker, Center Sales & Retail Channel, ICICI Direct Websites, ICICI Intranet and related statistics. As far as other information is concerned I had personally visited the department & met concerned people in various department, they explained to me the process and responsibilities of the team. They helped me to understand the meaning & relevance of each parameter considered in the project.
DATA COLLECTION
The objective of this exercise is to get the overview of the Investment Banking Structures in India. I have collected the data from following data sources. 1. Data related to Registration, Functions, Code of Conducts of Investment Banks taken from the SEBI Website and Investment Banking book of R Machiraju. 2. Raw data related to Adani Power IPO and Bidding Manual process has been collected from the ICICI Intranet Portal. 3. Data related to the ICICI Case studies collected from the various department of ICICI Securities with the prior permission of department Head.
INTRODUCTION
Investment banks play a significant role in the financial services sector. However, Investment banking, as advisory financial services, emerged rather late. Formal Investment banking service in India originated with the setting up of the Investment banking division by the Grind lays Bank in 1969 for undertaking management of public issue and financial consultancy, followed by other foreign banks. Pursuant to the recommendations of the Banking Commission (1972), State Bank of India started Investment banking service in 1973. The ICICI Ltd was the first development finance institution to initiate such service in 1974. The period following the mid-seventies witnessed a boom in the growth of Investment banking organizations in the country which were sponsored by banks, financial institutions, NBFCs Brokers and so on. This led to diversification into the scope of these activities such as loan syndication, portfolio management, corporate counseling, project counseling, debenture trusteeship, mergers, Amalgamations & takeovers and so on. Investment banking is a particular form of banking which finances capital requirements of an enterprises. Investment banking assists as it performs IPOs, private placement and bond offerings, acts as broker and carries through mergers and acquisitions. But the scope of such services was neither defined nor was a set of rules and regulations governing them in place. The formation of SEBI in 1992 was a landmark in the evolution of Investment banking as a professional service in the country. Investment banking organizations have to be mandatorily registered with SEBI. While Investment bankers are currently providing a variety of services, registration with SEBI is required for (i) Capital issues related activities : both pre-issued and post-issue, (ii) mergers and acquisitions, and (iii) Portfolio Management.
DEFINITION
A Investment banker is any who is engaged in the business of issue management either by making arrangements regarding selling, buying or subscribing to securities or acting as
manager/consultant / advisors or rendering corporate advisory service in relation to such issue management.
REGISTRATION OF INVESTMENT BANK

Compulsory Registration:
Investment bankers require compulsory registration with the SEBI to carry out their activities. They fall under four Registration categories Category I Investment bankers can carry on any activity related to issue management, that is , the preparation of prospectus and other information relating to the issue, determining the financial structure, tie up of financiers, final allotment of securities, refund of the subscription and also act as advisors, consultants, managers, underwriters or portfolio Managers. Category II Investment bankers can act as advisors, consultants , co-managers, underwriters and portfolio Mangers. Category III Investment bankers can act as underwriters, advisors and consultants to an issue. Category IV Investment bankers can act only as adviser or consultant to an issue. Thus, only category I Investment bankers could act as lead managers to an issue. With effect from December 9, 1997, however, only Category I Investment bankers are registered by the SEBI. To carry on activities as portfolio managers, they have to obtain separate certificate of registration from the SEBI.
Net worth requirement for Registration is as follow:

Category I : Rs. 5,00,00,000 Category II : Rs. 50, 00, 000 Category III :Rs. 20, 00, 000 Category IV : Nil
GRANT OF CERTIFICATE
The SEBI grants a certificate of registration on consideration of all matters that are relevant to the activities related to the Investment banker: (a) Investment bankers should also be a body corporate other than a non-banking financial company. However, a Investment banker who has been granted registration by the RBI to act as Primary Dealer may carry on such activity subject to the condition that it would not accept / hold public deposit, (b) they are expected to have the necessary infrastructure like adequate office space , equipment and manpower to effectively discharge their activities (c) they should have employed at least two persons with experience to conduct Investment banking business (d) any person directly or indirectly connected with the applicant, (e) they fulfill the capital adequacy requirement of a minimum net worth of Rs. 5 Crore (f) partners, directors and principal offices should not be involved in any litigation connected with the securities market, which has an adverse effect on their business (g) have recognized professional qualification in finance , law or business management and or their registration is in the interest of the investors and (h) the applicant is a fit and proper person. The provisions of the SEBI criteria for Fit and proper person regulations discussed below would be applicable to the applicants.
REGISTRATION CHARGES
An Investment banker has to pay to the SEBI 1. Application fee of Rs.25,000;
10 | I n v e s t m e n t B a n k i n g i n I n d i a
2. 3.
Registration , Rs. 10 Lakhs and Renewal fee of Rs. 5 lakhs every three years from the fourth year from the date of initial registration.
CONDITIONS OF REGISTRATION
The Registration / renewal of certificate of the Investment banker would be subject to the following conditions:
1.
Prior approval of the SEBI would be necessary to continue to act as a Investment banker after change of its status/constitution. Change of status / Constitution means any change in status / constitution of whatsoever nature including (a) amalgamation/demerger /consolidation / any other kind of corporate restructuring , (b) change in its managing /whole time directors and (c) any change in control over the body corporate. Change in control means (i) if its shares are listed , change of control in terms of stipulations of the SEBI takeover Regulations (ii) change in its controlling interest in any other case . controlling interest means direct / indirect interest to the extent of at least 51 percent of voting rights.
2.
Enter into a legally binding contract with the issuer specifying their mutual duties and responsibilities
3. 4.
Pay the registration / renewal fee in the prescribed manner. Take adequate steps for redressal of investors grievances within one month of the complaint and keep the SEBI informed about the number , nature and other particular of such complaints together with the manner of their redressal.
5.
Abide by the relevant regulations under the SEBI Act.
CODE OF CUNDUCT
1. 2. 3. 4. Make all efforts to protect the interest of investors. Maintain high standards of integrity, dignity and fairness in the conduct of its business. Fulfill its obligations in a prompt, ethical and professional manner. At all times exercise due diligence, ensure proper care and exercise independent professional judgments 5. Endeavour to ensure that (a) inquiries from investors are adequately dealt with; (b) grievances of investors are redressed in a timely and appropriate manner ;(c) where a complaint is not remedied promptly, the investor is advised of any further steps which may be available to him under the regulatory system. 6. Ensure that adequate disclosures are made to the investors in a timely manner in accordance with the applicable regulations and guidelines so as to enable them to make a balanced and informed decision. 7. Endeavour to ensure that the investors are provide with true and adequate information without making any misleading or exaggerated claims or any misrepresentation and are made aware of the attendant risk before taking any investment decision. 8. Endeavour to ensure that copies of the prospectus, offer document, letter of offer or any other related literature is made available to the investors at the time of issue or the offer. 9. Not discriminate amongst its clients, save and except on ethical and commercial considerations.
10.
Not make any statement, either oral or written, which would misrepresent the services that the Investment banker is capable of performing for any client or has rendered to any client.
11.
Avoid conflict of interest and make adequate disclosure of its interest.
12.
Put in place a mechanism to resolve any conflict of interest situation that may arise in the conduct of its business or where any conflict of interest arises, should take reasonable steps to resolve the same in an equitable manner.
13.
Make appropriate disclosure to the client of its possible source or potential areas of conflict of duties and interest while acting as Investment banker which would impair its ability to render fair, objective and unbiased services.
14.
Always endeavor to render the best possible advice to the clients having regards to their needs.
15.
Not divulge to anybody either or in writing, directly or indirectly , any confidential information about its clients which has come to its knowledge, without taking prior permission of its clients, except where such disclosures are required to be made in compliance with any law for the time being in force
16.
Ensure that any change in registration status / any penal action taken by the SEBI or any material change in the Investment bankers financial status, which may adversely affect the interests of clients / investors, is promptly informed to the clients and any business remaining outstanding is transferred to another registered intermediary in accordance with any instructions of the affected clients.
17.
Not indulge in any unfair competition, such as weaning away the clients on assurance of higher premium or advantageous offer price or which is likely to harm the interests of other Investment bankers or investors or is likely to place such other Investment bankers in a disadvantageous position which competing for or executing any assignment.
18.
Maintain arms length relationship between its Investment banking activity and any other activity.
19.
Have internal control procedures and financial and operational capabilities which can be reasonably expected to protect its operations, its clients, investors and other registered
entities from financial loss arising from theft, fraud, and other dishonest acts, professional misconduct or omissions. 20. Not make untrue statement or suppress any material fact in any documents, reports or information furnished to the SEBI. 21. Maintain an appropriate level of knowledge and competence and abide by the provisions of the SEBI Act / regulations / circulars and guidelines, which may be applicable and relevant to the activities carried on by it. 22. Ensure that the SEBI is promptly informed about any action, legal proceedings, etc, initiated against it in respect of material breach or non-compliance by it, of any law , rules, regulations , directions of the SEBI or of any other regulatory body.
23.
(a) Not render, directly or indirectly, any investment advice about any security in any publicly accessible media, whether real-time or non real-time , unless a disclosure of his interest including a long or short position, in the security has been made, while rendering such advice; (b) In the event of an employee of the Investment banker rendering such advice, the Investment banker should ensure that such employee should also disclose the interests, if any, of himself , his dependent family members and the employer Investment banker, including their long or short position in the security , while rendering such advice.
24.
Demarcate the responsibilities of the various intermediaries appointed by it clearly so as to avoid any conflict or confusion in their job description.
25.
Provide adequate freedom and powers of its compliance officer for the effective discharge of his duties.
26.
Develop its own internal code of conduct its internal operations and laying down its standards of appropriate conduct for its employee and officers in carrying out their duties. Such a code may extend to the maintenance of professional excellence and standards,
integrity, confidentiality, objectivity, avoidance or resolution of conflict of interest, disclosure of shareholding and interest etc. 27. 28. Ensure that good corporate policies and corporate governance are in place. Ensure that any person it employees or appoints to conduct business is fit and proper and otherwise qualified to act in the capacity so employed or appointed. 29. Ensure that it has adequate resources to supervise diligently and does supervise diligently persons employed or appointed by it in the conduct of its business, in respect of dealings in securities market. 30. That the senior management, particularly decision makers have access to all relevant information about the business on a timely basis. 31. Not be a party to or instrument for (a) creation of false market ;(b) price rigging or manipulation or; (c) passing of unpublished price sensitive information in respect of securities which are listed and proposed to be listed in any stock exchange to any person or intermediary in the securities market.
OFFERING & SERVICES OF INVESTMENT BANKS

Project Counseling:
Project counseling includes preparation of project reports, deciding upon the financing pattern to finance the cost of the project and appraising the project report with the financial institutions or banks. It also includes filling up of application forms with relevant information for obtaining funds from financial institutions and obtaining government approval.
Issue Management:
Management of issue involves marketing of corporate securities viz. equity shares, preference
shares and debentures or bonds by offering them to public. Investment banks act as an intermediary whose main job is to transfer capital from those who own it to those who need it. After taking action as per SEBI guidelines, the Investment banker arranges a meeting with company representatives and advertising agents to finalize arrangements relating to date of opening and closing of issue, registration of prospectus, launching publicity campaign and fixing date of board meeting to approve and sign prospectus and pass the necessary resolutions. Pricing of issues is done by the companies in consultant with the Investment bankers.
Underwriting of Public Issue:

Underwriting is a guarantee given by the underwriter that in the event of under subscription, the amount underwritten would be subscribed by him. Banks/Investment banking subsidiaries cannot underwrite more than 15% of any issue.
Managers, Consultants or Advisers to the Issue:

The managers to the issue assist in the drafting of prospectus, application forms and completion of formalities under the Companies Act, appointment of Registrar for dealing with share applications and transfer and listing of shares of the company on the stock exchange. Companies can appoint one or more agencies as managers to the issue.
Portfolio Management:
Portfolio refers to investment in different kinds of securities such as shares, debentures or bonds issued by different companies and government securities. Portfolio management refers to maintaining proper combinations of securities in a manner that they give maximum return with minimum risk.
Advisory Service Relating to Mergers and Takeovers:

A merger is a combination of two companies into a single company where one survives and other loses its corporate existence. A takeover is the purchase by one company acquiring controlling
interest in the share capital of another existing company. Investment bankers are the middlemen in setting negotiation between the two companies.
Off Shore Finance:

The Investment bankers help their clients in the following areas involving foreign currency. (a) Long term foreign currency loans (b) Joint Ventures abroad (c) Financing exports and imports (d) Foreign collaboration arrangements
Non-resident Investment:
The services of Investment banker includes investment advisory services to NRI in terms of identification of investment opportunities, selection of securities, investment management, and operational services like purchase and sale of securities.
Loan Syndication:
Loan syndication refers to assistance rendered by Investment bankers to get mainly term loans for projects. Such loans may be obtained from a single development finance institution or a syndicate or consortium. Investment bankers help corporate clients to raise syndicated loans from banks or financial institutions.
Corporate Counseling:
Corporate counseling covers the entire field of Investment banking activities viz. project counseling, capital restructuring, public issue management, loan syndication, working capital, fixed deposit, lease financing acceptance credit, etc.
Ranking of Merchant Banking in India:

Merchant Banker OE FSS QPS QM INN
ICICI Securities IDBI SBI Caps DPS IFCI Bank of Baroda Jardine Fleming JM Finance ENAM PNB Caps
4.0 4.2 4.4. 6.1 6.1 6.7 5.8 6.0 6.3 6.8
4.0 3.2 3.9 5.7 5.7 6.5 6.2 6.5 6.8 6.8
4.2 4.5 4.6. 6.0 6.0 6.7 5.9 5.5 6.4 6.7
3.8 4.0 6.7 6.0 6.0 6.6 5.0 5.9 6.3 6.8
4.3 4.8 5.2 5.3 6.3 6.8 5.5 5.4 6.2 6.8
Note: OE: Overall Excellence; FSS: Financial Soundness ; QPS: Quality Product/Service; QM: Quality Management; INN: Innovativeness.
ORGANISATIONAL STRUCTURE IB
Front Office - Investment Banking - Sales & Trading - Research - Custodian - Investment Mgmt Middle Office - Risk - Finance - Compliance Back Office - Operations - Technology
Main activities and units

An investment bank is split into the so-called front office, middle office, and back office. Investment banks offer security to both corporations issuing securities and investors buying securities. For corporations investment bankers offer information on when and how to place their securities in the market. The corporations do not have to spend on resources with which it is not equipped. To the investor, the responsible investment banker offers protection against unsafe securities. The offering of a few bad issues can cause serious loss to its reputation, and hence loss
of business. Therefore, investment bankers play a very important role in issuing new security offerings
Front office
1.
Investment banking is the traditional aspect of the investment banks which also involves helping customers raise funds in the capital markets and advise on mergers and acquisitions. Investment banking may involve subscribing investors to a security issuance, coordinating with bidders, or negotiating with a merger target. Another term for the investment banking division is corporate finance, and its advisory group is often termed mergers and acquisitions (M&A). The investment banking division (IBD) is generally divided into industry coverage and product coverage groups. Industry coverage groups focus on a specific industry such as healthcare, industrials, or technology, and maintain relationships with corporations within the industry to bring in business for a bank. Product coverage groups focus on financial products, such as mergers and acquisitions, leveraged finance, equity, and high-grade debt and generally work and collaborate with industry groups in the more intricate and specialized needs of a client.
1.
Sales and trading: On behalf of the bank and its clients, the primary function of a large investment bank is buying and selling products. In 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. Structuring has been a relatively recent activity 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. Strategists advise external as well as internal clients on the strategies that can be adopted in various markets. Ranging from derivatives to specific industries, strategists place companies and industries in a quantitative framework with full consideration of the macroeconomic scene. This strategy often affects the way the firm will operate in the market, the direction it would like to take in terms of its proprietary and flow positions, the suggestions salespersons give to clients, as well as the way structures create new products. Banks also 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 buys or sells a product to a client and does not hedge his total exposure. Banks seek to maximize profitability for a given amount of risk on their balance sheet. The necessity for numerical ability in sales and trading has created jobs for physics and math Ph.D.s who act as quantitative analysts.
1.
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. There is a potential conflict of interest between the investment bank and its analysis in that published analysis can affect the profits of the bank. Therefore in recent years the relationship between investment banking and research has become highly regulated requiring a Chinese wall between public and private functions.
1.
Custody and agency services is the division which provides cash management, lending, and securities brokerage services to institutions. Prime brokerage with hedge funds has
been an especially profitable business, as well as risky, as seen in the "run on the bank" with Bear Stearns in 2008.
1.
Investment management is the professional management of various securities (shares, bonds, etc.) and other assets (e.g. real estate), to meet specified investment goals for the benefit of the investors. Investors may be institutions (insurance companies, pension funds, corporations etc.) or private investors (both directly via investment contracts and more commonly via collective investment schemes eg. mutual funds). The investment management division of an investment bank is generally divided into separate groups, often known as Private Wealth Management and Private Client Services.
Middle office
1.
Risk management involves analyzing 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 standardized 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 includes 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.
1.
Finance areas are responsible for an investment bank's capital management and risk monitoring. By tracking and analyzing the capital flows of the firm, the Finance division is the principal adviser to senior management on essential areas such as controlling the firm's
global risk exposure and the profitability and structure of the firm's various businesses. In the United States and United Kingdom, a Financial Controller is a senior position, often reporting to the Chief Financial Officer. Corporate strategy often falls under the finance division as well.
2.
Compliance areas are responsible for an investment bank's daily operations' compliance with government regulations and internal regulations. Often also considered a back-office division.
Back office
1.
Operations involve data-checking trades that have been conducted, ensuring that they are not erroneous, and transacting the required transfers. While some believe that operations provides the greatest job security and the bleakest career prospects of any division within an investment bank[4], many banks have outsourced operations. It is, however, a critical part of the bank. Due to increased competition in finance related careers, college degrees are now mandatory at most Tier 1 investment banks.[citation needed] A finance degree has proved significant in understanding the depth of the deals and transactions that occur across all the divisions of the bank.
1.
Technology refers to the information technology department. Every major investment bank has considerable amounts of in-house software, created by the technology team, who are also responsible for technical support. Technology has changed considerably in the last few years as more sales and trading desks are using electronic trading. Some trades are initiated by complex algorithms for hedging purposes
CHINESE WALL CONCEPT IN INVESTMENT BANK

An investment bank can also be split into private and public functions with a Chinese wall which separates the two to prevent information from crossing. The private areas of the bank deal with private insider information that may not be publicly disclosed, while the public areas such as stock analysis deal with public information.
IPO MANAGEMENT
BRIEF ABOUT THE ISSUER: It is a power project development company, which is developing, and will operate and maintain, power projects in India. They have four thermal power projects under various stages of
development, with a combined installed capacity of 6,600 MW. In addition, they are also planning to develop two power projects with a combined installed capacity of 3,300 MW. They intend to sell the power generated from these projects under a combination of long-term power purchase agreements to industrial and state-owned consumers and on Investment basis. They are part of the Adani Group, a leading business group in India. Adani Enterprise Limited, their Promoter, is the flagship company of the Adani Group, with total revenues of Rs. 196,097.10 million for the fiscal year 2008. They believe AEL was one of the largest traders of coal in India for the three years period ended March 31, 2008, with coal mining rights both in the international and domestic markets, and according to Central Electricity Regulatory Commission, for the three years period ended March 31, 2008, AEL was one of the largest power traders, by volume, in India. With the commissioning of their power projects, the Adani Group will be vertically integrated in power sector value chain through presence in related activities such as coal mining, coal trading, shipping, power generation, power transmission and power trading. Another Adani Group company, Mundra Port and Special Economic Zone Limited (MPSEZL), owns and operates one of the largest private sector commercial ports in India, a Special Economic Zone (SEZ) at Mundra and a railway line between Mundra and Adipur leading to strong synergies with their projects being set up in close vicinity. In addition, the Adani Group also has operations in other industries, including commodities trading, real estate development, agro processing and logistics. They expect that they will benefit from Adani Groups strategy of vertical integration, which gives them greater control over various activities of power generation and trading.
OBJECTIVE OF THE ISSUE To part finance the construction and development of Mundra Phase IV Power Project for 1,980 MW. Funding equity contribution in our subsidiary Adani Power Maharashtra Limited to part
finance the construction and development cost of power project for 1,980 MW at Tiroda, Maharashtra and General Corporate Purposes INDICATIVE ISSUE STRUCTURE
Issue of Equity Shares Employee Reservation Portion Net Issue to the Public QIB Portion ** Available for MF Only Balance of QIB Portion (After Deducting MF ) Non-Institutional Portion Retail Portion
301,652,031 Equity Shares 8,000,000 Equity Shares 293,652,031 Equity Shares Atleast 176,191,219 Equity Shares 8,809,561 Equity Shares 167,381,658 Equity Shares Upto 29,365,203 Equity Shares Upto 88,095,609 Equity Shares ** The Company may consider participation by Anchor Investors for upto 52,857,366 Equity Shares in accordance with applicable SEBI Guidelines
PRICE BAND: Rs. 90/- to Rs. 100/- per equity share BID LOT: 65 Equity Shares & in multiples thereof
INDICATIVE TIMING OF ISSUE ISSUE OPEN DATE : 28-JULY-2009 ISSUE CLOSE DATE : 31-JULY-2009
BOOK RUNNING LEAD MANAGER: 1. 2. 3. 4. 5.

6. 7.
ICICI Securities Kotak Securities DSP Merrill Lynch JM Financial SBI Capital Markets Limited
Morgan Stanley IDFC
SYNDICATE MEMBER: 1. 2. Edelweiss Securities Limited India Infoline Limited
3.
UBS Securities India Private Limited
SHAREHOLDING PATTERN ( POST ISSUE ): Promoter and Promoter Group 3i Power Investments A1 Limited Adishree Tradelinks Private Limited Capital Trade and Investment Private Limited
Employees Other Public
73.50% 3.13% 3.13% 1.23%

0.37% 0.93% 13.47%
BROKERAGE:
CATEGORY RETAIL INVESTOR HNI & Non Institutional Investor QIB
BROKERAGE 0.35% On Amt Allotted 0.20% on Amt Allotted Nil
ZONE WISE IPO SUBSCRIPTION ON 28TH JULY 2009 ICICI SECURITIES LTD
1.
OFFLINE BIDDING URL MODULE MANAUAL
Data Entry
1. 1. Click on the URL http://172.16.35.19/tradingscreens/ Input the NT User Id and password.
2.
Select IPO Offline
3.
Select Place Bids
4.
Set Lot Size ?(enter 1) and click on Fix.
5.
Following Screen would appear. This would be the page into which the Application details have to be inputted.
a) Select IPO Please select Adani Power Limited ADAPOW

b) Application Number This is a mandatory field without which the entry will not be saved. Number appearing on top right hand corner of the BAF(Bid cum Application Form). Please enter full application number along with Prefix. In the below mentioned BAF, the application form to be entered would be 14746869 wherein the prefix in this form is 1 the prefix vary from application to application
1.
Select NSDL/CDSL as per customer indication on the BAF and enter as under
1. NSDL
2. 3. 4.
DP Name DP Id (eight characters) Client Id (eight characters

1. CDSL
1.
DP Name
ii. DP Id to be left blank 1. Client Id (sixteen character)
In DP Name care to be exercised that no special character like full stop, comma, hyphen, ampersand is included. (. , - & ). 2. Investor Status Select relevant status. If customer is individual select IND
3.
Bid Enter the bids put in by the customer. If he has put in three bids all three to be filled 1. 2. 3. Number of shares Has to be in multiples specified in issue offer Price Has to be within the price band Cut Off- In case customer has mentioned cut off, then just the number of shares and cut off has to be selected
4. 5. 6.
Investor Name Name to be entered Phone Number and Email Id These are optional fields Agent Code to be entered as Employee Code of the employee who has procured the application.
7. 2.
After inputting the data click on Save
On clicking save if all the entries have been entered correctly, the following prompt will appear. Click on Ok to proceed. In case there is some error in the data entry, there would be a prompt warning the customer illustrated in point 4
3.
The following screen would appear. Click OK to return to the data entry screen
4.
After inputting the data if there would be an error the following prompt would appear. Branch can either proceed by selecting Ok or can rectify the error by clicking on cancel. If branch clicks on OK, the record would be saved If branch clicks on Cancel, they can rectify the entry then and there and then save the record
9. After the bidding is completed the form should be submitted at the nearest collecting bank.
ICICI SECURITIES:
ICICI Securities is the largest equity house & SEBI Registered Category I Investment Banks in the country providing end to end solution through the largest non-banking distribution channel so as to fulfill the needs of retail and corporate clients. It has a dominant position in its core segment of its operations Corporate Finance including Capital Market Advisory services , institutional equities and financial product distribution
BOARD OF DIRECTOR
5. 6. 7. 8. 9. 10. 11. 12. 13. Ms. Chanda Kocchar Chairperson Mr. Ketan Patel Mr.Narendra Murkumbi Mr.Uday Chitale Mr.Pallavi Vohra Mr. Sonjoy Chatterjee Ms. Madhabi Puri Buch MD & CEO Mr. A Murugappan - Executive Director Mr. Anup Bagchi Executive Director
RECENT AWARDS & RECOGNITION

1. 2. ICICI Securities is awarded as the Best Investment Bank 2008 by Global Finance Magazine The Corporate Finance Group also awarded a runner up Best Investment Banker by outlook Money in 2007.
GLOBAL PRESENCE
ICICI Securities has presence in following Countries 1. 2. 3. 4. India Singapore USA Oman
CORE BUSINESS :
Institutional Business
Equity Capital Market:
ICICI Securities has been at the forefront of Capital Market advisory for several decades and has been involved in most of the major book-building and fixed price public equity issuance. It is the leading underwriters of equity and equity linked offering. Equity product includes IPO, Rights offering, Convertible offerings and private placement and international offerings. ICICI Securities has successfully handled 206 Equity Public Issues, 193 Right Issues and 28 Open offers
Merger & Acquisition:

ICICI Securities is amongst the first investment banks to form a dedicated M&A practice and provide innovative and customized solution to achieve the objectives of clients. ICICI Securities provide buy-side and sell-side advisory services as a part of M&A advisory offerings including JV, Mergers, and acquisitions.
Private Equity:
ICICI Securities has a dedicated practice to assist companies with capital mobilization through private equity / Venture Capital route across their life cycle. ICICI helps companies to raise capital during the seed , growth and expansion phases.
Retail Business
Retail Equities (ICICIdirect.com) :
ICICIdirect.com offers a convenient and easy to use platform to invest in equity and various other products. Buying and selling shares are just a click away. It has 3-in-1 concept enables customers to tie in their savings bank, demat and brokerage accounts electronically and seamlessly. ICICI also offers access to comprehensive research information, stock picks, mutual funds, recommendations etc. In 3 in 1 concept, once a request is placed for investing in a particular fund, there are no manual processes involved. Bank funds are automatically debited or credited while simultaneously crediting or debiting the 36 | I n v e s t m e n t B a n k i n g i n I n d i a
unit holdings. Client can have a control on its own investment. ICICI Direct is the first broker in india to introduce Digital Signed Contract Note to its customer ICICI Direct Super Store: ICICI Direct has recently launched the concept of Super Store in India, These stores offers a variety of financial products and services under one roof. It has also started financial planning services at these stores. ICICI Retail customers as well as New Customer (Prospects )can walk in to ICICI Direct super store for financial products like 3 in 1, Equities, MF, IPO, Life and General Insurance, HL, PL and Fixed Income products. The stores also conduct periodic training session on Capital Market.
Active Trader Services (ATS) : ATS is a offline platform for Born Traders, The client who deals more than Rs. 500000 is treated as Active Trader . As a customer of ATS , ICICI provide Dedicated Relationship Manager , Special Research Team to ATS Customer. Sub Broker Channel: This is the prime business channel in ICICI Securities, It offers Win Win partnership for entrepreneurs, This channel acts as a business catalyst. All the Sub-Brokers are registered with ICICI Securities and able to transact through the fully automated ICICI Direct Platform
SALES
CHANNEL OF ICICI SECURITIES

SALES CHANNEL I-Direct Stores: In India, there are 300 ICICI Direct Center ,customer can walk in to these centers for financial products like 3 in 1 A/c, Equities , MF , IPO, LI , GI, HL, PL and other financial products. These stores also conduct periodic training session on capital Market. Services like Financial planning is available in I Direct Stores, where customer can find out his Risk Profiles and Plan his investments. Retail : The Team of 150 Dedicated Relationship Manager in Retail Channel, Basically They are promoting 3 in 1 Account and Agency Sales. They are promoting all the Financial Products of ICICI Securities Equity Team : Equity Team includes ATS (Active Traders Services) & EAG (Equity Advisory Group). ATS is mainly focus on HNI Customers whose Net worth is greater than Rs.500000 and they are actively trade in Capital Market, ICICI Provide Separate RM & Dealer Team for ATS Customer. EAG Team Mainly Covers HNI Customers having Net worth is more than Rs. 1 Crore , They do research on Various companies and provide Advisory Services to the Customers.
Sub-Broker Channel: In ICICI Securities there are 60 Relationship Manager & 75 CSEs handles 900 Active Sub Brokers Channel. This is the prime channel in ICICI Securities It offers Win Win partnership for entrepreneurs, this channel acts as a business catalyst.
All the Sub-Brokers are registered with ICICI Securities and able to transact through the fully automated ICICI Direct Platform
RESEARCH TEAM
This is the very important Area of Investment Banking, All the Business & Research Analyst sits in this Team, and In ICICI Securities Most of the Analyst are hired from well known Business School. In ICICI Securities, Research Team is divided into two segments Viz. A) INSTITUTIONAL RESEARCH
The Institutional research team has 30 analysts, with coverage of 150 stocks. `India Unlimited', an annual investors' conference held in Singapore and New York, witnesses excellent responses from investors every year. The team also holds a number of theme based conferences in India that draw good responses from the clientele
B) RETAIL RESEARCH
ICICIdirect.com research, a 30-member strong team, is a leader in independent equity research on over 170 companies, specializing in large, small and mid cap companies. Our research team makes over 300 company visits per year, meeting with management from the smallest to the largest cap companies. Large cap companies provide an overview of industry environments, while small and mid-cap companies are chosen 'bottom-up', providing a unique perspective from a generally under-researched end of the market. I-Sec focus on identifying companies, which they believe are likely to generate wealth for investor on a sustained basis through in-depth fundamental research and extensive company visits.
Research Team offers Services like Detailed Company Report, Pick of the Week, Model Portfolio, Stock on the Move, Daily & Weekly derivatives, Intra-day calls, Daily, Weekly & Monthly Technical with an impeccable strike rate.
Snap Shot of Research Report
OPERATIONS & PROCESS:SUB-BROKER OPERATION: Registration Process

1. RM approach to Sub-Broker and fill up the NSE, BSE and ICICI Securities Application form. 2. RM collect following from Sub-Broker along with the Application. 1. 2.
3.
PAN Card Copy. Address Proof (Passport / Telephone Bill / Bank Statement). Education Proof (Mark Sheet / 12th Pass Certificate). Passport Size Photo (5 Copies). CA Letter on the Letter Head. Bank Letter. Affidavit in case of Name Mismatched (If the name on Pan is different from the name on Application).
4. 5. 6. 7.
8. 9. 10. 11. 3.
DD Worth Rs.10,000 towards NSE Registration Fees. DD Worth Rs. 10,000 towards BSE Registration Fees. DD Worth Rs. 25,000 towards ICICI Sec Application Fees. DD Worth Rs. 50,000 towards Security Deposits.
RM send the above 3 files NSE , BSE and ICICI Application files to the Operation Team which resides at Turbhe.
4. 5.
Operation Executive inward the file in INWARD MIS Operation Executive check the documents with the help of legal & Compliance Team and deposit DD to the escrow account.
6.
If there is any rejection he intimate it to the RMs else he sends the files to the Exchange for the Registration.
7. 8.
Normal TAT at Exchange is 3 to 6 Months. Once we received Registration Certificate from Exchange , Legal department keep the original certificate and send photo copy to the respective Sub-Broker.
9.
Once certificate received by Sub-Broker , RM arrange NCFM & BCSM Examination for Sub-Broker.
10.
Once Ops receive NCFM & BCSM from Sub-Broker , he activate the Sub-Broker on ICICIdirect Portal, and provide username and password to the sub-broker.
SUB-BROKER CLOSURE PROCESS

RM Signs Closure Undertaking from Sub-Broker and send it to ops. Ops Check the Undertaking, if it is OK then close the Sub-Broker.
MUTUAL FUND OPERATION:

TRANSFER IN Transfer in is a process where the customer can bring his offline folio to ICICI Securities. Provided he should have an ICICIdirect A/C. Criteria for Transfer In Process: 1.
2. 3.
The offline folio should be in the name of same customer.

The offline folio should be in the single holding pattern. If the customer has SIP in the offline folio, it needs to be cancelled before placing Transfer In Request.
Documents required for Transfer In Process: 1. Transfer In Request Letter
2. 3. 4.
No Objection Certificate (NOC) Self attested PAN Copies Statement of holding for the folio to be transferred in.
Procedure to be followed by the Customer 1. 2. 3. Login to ICICIdirect A/C and go to MF Page. Click on Purchase In front of the AMC for which we wants to place a TI order, Click on the link Transfer In. 4. 5. Click on the Place TI Order link. In the form that opens, select the offline scheme name and folio number and click on Submit. 6. Once he click on submit, he will be given an option to print this application. The Customer needs to take a print of the application, Sign it and sent it along with NOC, Statement of holding for the folio and PAN Copy to the Operation Team at Corporate Office. How does the Transfer In request take place? 1. Once the customer places a Transfer In request online, the status of the order will be Documents Awaited in TI Book till the customer sends the documents to us. 2. On receipt of the documents for Transfer in, they are first verified in accordance with the basic requirements of the respective Asset Management Company (AMC). 3. Post verification, the documents are sent to the AMC/ Registrar for further processing and the status of the order is changed to Sent to Registrar 4. On confirmation from the AMC / Registrar, the number of units transferred in is updated on the site and the status of the order then becomes Executed. The customer can then view the units online in his unit holdings.
5.
The TAT for the Transfer In process is 15 working days from the date of receipt of documents at ICICI Securities.
TRANSFER OUT Transfer out is a procedure of change in broker code where an ICICIdirect customer want s to either directly deal with AMC. Criteria for Transfer Out Process: 1. The customer cant transfer the unit holding in joint name as only single holder is allowed in ICICIdirect 2. The customer should cancel the ongoing SIP before he places a transfer out request for these folios.
Documents required for Transfer In Process: 1. 2. Transfer Out Application form. Self attested PAN Copy.
Procedure to be followed by the Customer 1. Customer needs to send the above mentioned documents to the ops at corporate office.
How does the Transfer In request take place 1. On receipt of the Transfer Out request letter from the customer, we shall verify the customer details, address, the bank mandate details and the signature with that in the records of ICICI Securities. 2. 3. ICICI Securities will then issue an NOC, duly signed by the Authorized signatory. The Customers request letter, along with the NOC and PAN copy is then sent to the respective AMC / Registrar for further processing.
4.
Once transfer out is done, the units holding of the customer will become nil, and the details of the transfer out will be reflected in customers order book.
5.
The TAT for the Transfer out process is 15 working days.
INTERNAL TRANSFER FROM ONE MATCH A/C TO ANOTHER: Internal transfer is a process where customer can transfer mutual fund unit holdings from one Match A/c to another, provided both the Match Account are in the same name, it ensure that the customer closes one of the accounts after the transfer is done because as per SEBI guidelines, a customer can not maintain more than one trading a/c with a broker. Documents required for Internal Transfer Process : 1. 2. Internal Transfer Application for Resident & NRI Customer PAN Copy
How can the customer transfer his units from one A/C to another ? 1. 2. Customer needs to submit specific formats Customer needs to place transfer in orders for all the schemes in the source match a/c these orders have to be placed in the target match a/c. 3. Customers should cancel any ongoing SIP in the source ICICIdirect A/C before giving any internal transfer request. In case an internal transfer request is given with ongoing SIPs in the source Match A/C, the same will be cancelled. The customer may in future start a new SIP in the Target ICICI direct A/c. Type of Internal Transfer 4. 5.
6.
One resident match a/c to another resident match a/c. NRI ICICIdirect a/c to resident ICICIdirect a/c. Resident ICICIdirect a/c to NRI ICICIdirect a/c.
BROKERAGE PATTERN IN ICICI SECURITIES

TYPE Business Partner Referral Commission Trail Commission - ICICI Securities - Business Partner Commission on Equity (Cash) Commission on Equity (Intra day) Commission on Derivatives Mutual Funds IPO AMOUNT Rs.100 Per New BP Acquisition
70% on Total Commission 30% on Total Commission 0.25% on Total Equity (Cash) Turnover 0.03% on Total Intra Day (Margin) Turnover 0.03% on Total Derivative Turnover (F&O) Avg 0.30 Paisa (Differ Scheme to Scheme) Depend upon Issuer Company
OPERATIONAL CONTROL TEAM It is a internal control system in ICICI Securities, Their Main Job is to check the Operational Activities and ensure whether the work is getting done as per the TAT given. If there is any deviation in Work, they escalate the issue to Operational Control Team. Then OCT investigate the matter and find out the reason for the deviations. It is Team of 4 excellent Professionals. They screen the operational Activities. Operation Control releases following MIS on Monthly basis across the channel.
Area Observations 6 cases observed. Remarks Process Owner
Team to provide the Refund of security deposit to (Refer Annexure 1 for the list of sub reasons for delay of the sub-brokers brokers status which are closed for more refund and target date for than 6 months and security deposits due to refunding the same. be refunded) Pre registration (Sub Team to provide reasons Prior to Apr 09: broker Acquisition Status) Total number of cases 352 for pending cases at their Pending with Operations 5 Pending with end and resolve them within TAT. Sales 132 (Prior to April, 08: 16) Pending with Exchange 215 Current financial year (0910): Total pending cases 30 Operations 0
Anil Desale
Anil Desale/ Samardeep Sood
Sales 20 Exchange 10 1) Refund of security deposit - 4. 2) CTCL mapping - 4. 3) Change in personal details - Sub-broker Team to provide reasons - 2. for pending cases at their Anil Desale 4) Shifting of accounts - Retail to DBC end and resolve them 1. within TAT. 5) Shifting of account - Sub-broker to subbroker - 1. 6) Creation of additional node id - 1. 7) V- Sat related - refund not received - 1. Team to provide reasons Anil Desale / for cases pending with Samardeep operations. Sood Team to provide the target date for resolving these pending cases. Team to provide the target date for resolving these pending cases.
Queries pending to be resolved
Total pending cases 91 Active sub broker which are Operations 4 not registered Sales 21 Exchange 66 NSE undertaking for Total cases 803 additional clauses under sub broker agreement. Pending with sales 2 Authorized person for FNO Total pending cases 2 active sub broker
Manoj Kabra
Manoj Kabra
BCSM compliant node
BCSM non- compliant node 465
Team to update the status Arvind Gogia on total BCSM node id.
Pending with sales: Sub brokers to be closed For FY 2008-09 NSE 36 BSE 30 4 cases observed. SEBI fees yet to be recovered Details as per Annexure : 2 1) Linking & De-linking of Match Id's Linking,De linking,Shifting 34. of clients in sub broker 2) Shifting of match id's 28.
Samardeep Sood.
Team to update on details Anil Desale of recovery (if any). Team to update the count Anil Desale for the same
LEGAL & COMPLIANCE TEAM
This department's responsibility is to assist the various business units to understand and comply with SEBI guidelines with ICICI's Policies Role includes information and guidance, coordination , surveillance and enforcement,control room.
ANALYTICAL EXCELLANCE TEAM

It is a Team of 4 Analyst , They are using Analytical Tools like SAS and generate various types of Analytical Reports and submit it to the Product and Sales Team to take decision on Product Expansion and diversification.
MARKETING & ALLIANCES :

The main responsibility of M&A team is to organise promotional Activities like Road Promotion, Events etc in order to generate lead and those leads they forward it to concern Sales Channels. Also tie up with the vendors and Agencies for Marketing collatrals. Basically they are the support to the Sales channel.
HUMAN RESOURCE
HR Conducts Interview and hires talents from Internal & External Source, Also provides Training to the Newly hired staff, Employee Orientation, Hiring Process, Performance Appraisal, Training and development, Conduct Games at Corporate Office.
CONCLUSION
From the above study it has been concluded that In India Investment Banks are under regulation of SEBI, As per SEBI Guidelines on Merchant Banking , Whenever any corporate go for IPO or M& A They have to appoint Merchant Banker for Managing the affairs The future of Merchant Bank in India is very Bright , if you consider present Market Situation where Sensex & Nifty Index is 16000 & 5000 Respectively. So many corporate have declared and filed IPO & M&A With SEBI. Merchant Bankers act as a Lead Manager and as a lead manager they underwrite the Issue. The major revenue for merchant banks is received from the IPO, M&A, Advisory Services; it is purely fee based business. As we know in US Last year big investment bankers collapsed, the reason being Sub Prime Crisis. In US investment banks lend money on mortgage so sudden economical change reduced the demand for Real Estate and the prices of the property fallen down. So ultimately the fund which was financed for Housing has also been shrinking.
BIBILIOGRAPHY
1.
2. 3. 4. 5. 6. 7. 8.
SEBI: Merchant Banking Regulations, 1992. www.investopedia.com www.wikipedia.com www.icicisecurities.com www.moneycontrol.com www.google.com www.sebi.org www.rbi.org

Kartik Chell Dissertation

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Kartik Chell Dissertation

Uploaded by

Copyright:

Available Formats

INVESTMENT BANKING IN INDIA

IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR POST GRADUATE DIPLOMA IN MANAGEMENT

UDAI INSTITUTE OF MANAGEMENT STUDIES, JAIPUR, RAJASTHAN

PROJECT GUIDE CERTIFICATE FORM

____________________________ Signature of the Candidate

__________________________ Signature of Internal Guide

2 | Investment Banking in India

3 | Investment Banking in India

4 | Investment Banking in India

OBJECTIVE The main objective of the project is to :

REGISTRATION OF INVESTMENT BANK

Net worth requirement for Registration is as follow:

Abide by the relevant regulations under the SEBI Act.

Avoid conflict of interest and make adequate disclosure of its interest.

OFFERING & SERVICES OF INVESTMENT BANKS

Underwriting of Public Issue:

Managers, Consultants or Advisers to the Issue:

Advisory Service Relating to Mergers and Takeovers:

Off Shore Finance:

Ranking of Merchant Banking in India:

Main activities and units

CHINESE WALL CONCEPT IN INVESTMENT BANK

BOOK RUNNING LEAD MANAGER: 1. 2. 3. 4. 5.

SYNDICATE MEMBER: 1. 2. Edelweiss Securities Limited India Infoline Limited

UBS Securities India Private Limited

73.50% 3.13% 3.13% 1.23%

CATEGORY RETAIL INVESTOR HNI & Non Institutional Investor QIB

BROKERAGE 0.35% On Amt Allotted 0.20% on Amt Allotted Nil

OFFLINE BIDDING URL MODULE MANAUAL

Select IPO Offline

Select Place Bids

Set Lot Size ?(enter 1) and click on Fix.

a) Select IPO Please select Adani Power Limited ADAPOW

DP Name DP Id (eight characters) Client Id (eight characters

ii. DP Id to be left blank 1. Client Id (sixteen character)

After inputting the data click on Save

RECENT AWARDS & RECOGNITION

Merger & Acquisition:

CHANNEL OF ICICI SECURITIES

Snap Shot of Research Report

OPERATIONS & PROCESS:SUB-BROKER OPERATION: Registration Process

SUB-BROKER CLOSURE PROCESS

MUTUAL FUND OPERATION:

The offline folio should be in the name of same customer.

Documents required for Transfer In Process: 1. Transfer In Request Letter

The TAT for the Transfer out process is 15 working days.

BROKERAGE PATTERN IN ICICI SECURITIES

Anil Desale/ Samardeep Sood

Queries pending to be resolved

BCSM compliant node

BCSM non- compliant node 465

LEGAL & COMPLIANCE TEAM

ANALYTICAL EXCELLANCE TEAM

MARKETING & ALLIANCES :

You might also like