Gyaan Session

-- Ajusal Sugathan

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Finance Opportunity Map

Financial Services Industry

Capital Markets & Investment Management domain

Investment Banking

Equity Research

Analytics

Wealth Management

Private Equity
Communication skills Relationship management skills Understanding of businesses Understanding of global deal space

High pressure work Enjoy Financial environment Statement Analysis Focus on numbers Live by numbers and have an eye for spotting opportunities in industries Communication skills T
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Knowledge of asset Logical Reasoning Pattern Recognition classes Client management & BD skills Risk reward indentification

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Buy side v/s Sell side

Financial Markets

Sell-Side

Buy-Side

Investment Banks Brokerages

Private Equity
Institutional Investors

Hedge Funds Mutual Funds

Pension funds HNIs Insurance

Side that sells to investors

Companies Financial products

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What is Investment Banking

Investments?
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Banking?

Neither investments nor banking!!

Core Investment Banking = Corporate Finance

Capital Raising
Equity
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M&A Advisory

Private Placements

Debt
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What is Investment Banking

Investment Banking, in a broad sense, is concerned with the primary function of assisting capital market in the movement of financial resources from those who have them (investors) to those who want them (issuers)

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Investment Banking
Investment Bank
Primary Markets I-Banking (IBD) Secondary Markets Asset Management Sales & Trading (Markets)

Front Office

Middle Office

Back Office IT Services Transaction Processing Settlement Services

Risk Management
IBD S&T Equity Research

Regulatory

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Investment Banking
Investment Banking Division (IBD)

Product Groups
Mergers & Acquisitions Equity Capital Markets Debt Capital Markets

Industry Groups
Telecom & Media Financial Sponsors

Financial Institutions

Structured Finance

Real Estate

Retail

Regional Offices

Private Placements

Healthcare

Consumer

Energy & Power

Technology

Gaming, Leisure & Transportation

Multi Industries

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Capital Markets (IPOs, FPOs etc)

Underwriting:
Acts as an intermediary to assist companies in raising capital, typically in the form of debt and equity Earn fees as a percentage of capital raised
Fees earned = underwriting spread

Underwriting Syndicate:
Group of underwriters working on an issuance

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Mergers and Acquisitions

M&A: Provide advice on acquiring/selling a firm
Valuation, structuring, negotiations Acquisitions: Larger firm gobbles up smaller firm Merger: Equal Combination Fees: % of transaction value

Leveraged Buyout
Buyout of a company using large amount of debt

Reorganization/Restructuring/Distressed Sale
Advice a company in financial trouble Restructure the Capital Structure
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Types of Investment Banks

Standalone Bulge Bracket Investment Banks
Largest and most pre-eminent I-Banks on wall-street Dont have commercial arm

Universal Investment Banks

A type Bulge bracket investment banking Doesn't have a commercial banking arm

Mid-Market Investment Banks

Work with company valuations: $10mn - $250mn Considered to be underserved

Boutique Investment Banks

Very specialized investment banks (Only M&A generally) Focused on a specific industry sector

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I-Banking Hierarchy Hierarchy Structure-->

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CEO

Managing Director
Executive Director Vice President Associate Vice President Associate Analyst

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What Do Investment Bankers Do?

Origination Execution
Due Diligence Documentation SEC Merger and Offering Documents

Idea Generation Strategic Alternatives Capital Raising Risk Management Problem Solving Pitch Book Production Quantitative & Qualitative Analysis Client Contact

Purchase and Sale Agreements, Other Agreements

Financial Analysis (Valuation, Accounting Impact) Develop Presentation Materials for Board of Directors Meetings Financial Analysis Strategic Rationale Market Receptivity/reaction Prepare Materials for Internal Committees Identify Potential Investors and Develop Investor Marketing Materials

Negotiation/structuring
Client Management

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Deal Life Cycle M&A Sell% Side/PE Syndication

Winning Mandate

Collateral preparation Deal Closure Financial Modeling

Definitive agreements

Valuation

For internal valuation view and to be prepared for negotiations with counter-party

Re-negotiation on commercial terms based on due diligence findings

Due diligence

Investor Meetings

Dataroom setup
Commercial terms Negotiations End

Deal Structuring Letter of Intent

Commercial terms Negotiations Begin

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What Does an Analyst/Associate Do?

Financial Analysis:
Financial Forecasts and Projections Valuation Approach, Rationale and Modeling Capital Structure and Financing Impacts Merger Consequences Client and Industry Competitive Analyses Briefing Materials Idea/Solution Generation Outline and Organization Drafting and Editing Client Point Person for Execution Drafting Documents Due Diligence

Industry Research:

Presentation Preparation:

Transaction Execution:

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Marketing Material Preparation

Acquisition Project Support Strategic Studies Special Projects

Client Support:
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What Makes a Successful Banker?

KEY QUALITIES KEY QUALITIES

Quantitative Ability Quantitative Ability Intellectual Curiosity Intellectual Curiosity Communication Skills Communication Skills High Energy Level High Energy Level Research Skills Research Skills Entrepreneurial Entrepreneurial Presentation Skills Presentation Skills

Long-Term Commitment Long-Term Commitment

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I-Banking Hierarchy Hierarchy Structure-->

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CEO Managing Director Executive Director

Vice President
Associate Vice President Vice President

Associate
Analyst

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Typical day an I-Bank

My experience at Avendus Capital

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Hiring in India IIM A IIM B IIM C ISB (Select banks only) IIM L (Only Indian banks) FMS (Only Indian banks)

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Pros & Cons

Steep learning curve (Depth) Industry, finance, corporate strategy Exponential growth- salary and responsibility Width- Geography and Department Exit Options The next big names- India and China

Pros

Cons

Current Scenario Start at Analyst in Bulge brackets Hierarchical Relationship dependent success Hiring Firing

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From Shortlist to Conversion

Types of Questions Industry/Business Firm specific Macro Scenario HR Questions / Personal Fit Finance related Puzzles and Guestimates

What they are looking for Demonstrated excellence: Technical/Academic Problem Solving Ability Team Work Communication skills Leadership Presence & Professionalism Positive attitude and commitment to learn
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Homework 1: Learning About the Business

Read the financial newspapers magazines especially the commentary section Need to be current on major events in business world and current market levels Other good resources:
Barrons Economist Institutional Investor, Investment Dealers Digest, Derivatives Week Online WSJ Online FT

Know what is going on in the markets (stocks, bonds, Federal Reserve) Learn as much as you can about the business and the different functions

Understand the job: WHY you want to do it, WHAT you want to do

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Homework 2: Learning About the Firm

Research each firm you are talking to Web site News stories over the past few months Know enough to have a general conversation about the firm Seek out and talk to former employees or interns about their experiences at a firm
Know how they perceive themselves?

Every summer program is different, know the specifics

Internal structure Transactions recent

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Homework 3: Personal Fit

Be prepared to demonstrate fit via anecdotes:
Hardworking Motivated Taking Initiative Team Player Aggressive Handle stress well Personable Sound Judgment Articulate

Find the best bank for you

Team vs individual Merit vs political

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Homework 4: Technical
Finance DCF FCF Terminal Value WACC Comparables company Enterprise Equity Comparable s transactions CAPM Private co. valuation Other basic valuation fundas Accounting Basic treatment of a few items M&A related items Ratios Industry At least 1 Major drivers Major deals Few stocks Performance

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Interview Tips
Lead interview from tell me something about yourself to areas of your CV you are comfortable talking about
You should be able to explain each cv point in detail You should be able to explain why you made certain choices

Answering tough/unexpected questions

Remain composed and balanced Taking a moment is always appreciated Support your answering with reasoning and support the reasoning till the very end even if it is wrong midway

Personal Impact is important / client interfacing business

Body language Volume Confidence Always look in their eye and use their names

Conclusion: Its not as hard as you think

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