Want to choose a career as an investment banker? Let’s know what goes into becoming an investment banker, a lucrative profession, besides hard work and determination. To know more about making career as an investment banker, read the complete article below. Facebook, one of the majors of the Internet world, needed funds for expansion. Instead of going through the traditional channels of taking a loan, the founders decided to make the public a shareholder in their company. Facebook went public for the first time with their Initial Public Offering (IPO) of $38 per share. But to everybody’s surprise, the Internet giant struggled to keep its share prices above IPO price even on the first day. Investment banks had to jump in and rescue its stock prices from going below the IPO price, by buying its shares. Why did investment bankers intervene? What is it that they do?
About choosing a career as an Investment Banker
Those who choose career as Investment bankers are the lynchpins who assist businesses/governments in raising a large capital to fund their economic progress. When a company needs investment to expand, it can sell its shares to the public or can go to private investors. Investment bankers help them in achieving the desired objectives. Drawn by the allure of a six-figure monthly salary, and fat bonuses, graduates and post-graduates are increasingly choosing investment banking as their professional destination. Mind you, the road to becoming investment banker is everything but a bed of roses.
Who is an investment banker?
People with Investment banking career are experts at determining what is the worth of a business. Investment bankers bring entrepreneurs and large investors on the same table and take care of the financial needs of big businesses.
Investment bankers provide advisory, raise capital and execute mergers & acquisitions (M&A) operations for corporations and governments. They are primarily concerned with ‘raising capital’, which entails dressing up a company and selling it for investment to private equity investors, venture capitalists, businesses and sometimes to the public. Some of the biggest global investment banks include JP Morgan Chase, Goldman Sachs and Merrill Lynch hire investment bankers.
Key roles of an investment banker
The roles of those with career as investment bankers include evaluation of a business, providing advisory about investment opportunities, executing M&A and assessing financial risks. It involves doing industry research, identifying new deals, liaising with corporations and investors, preparing initial deal documentation, creating financial models, conducting negotiations etc.
Be ready to work 18 hours a day
Director Institutional Equities, Spark Capital
Careers360: Could you tell what an investment banker is all about?
Srivathsan: The capital market can be classified into Retail & Institutional, and Public & Private. In layman terms, Retail & Institutional side can be called as the ‘suppliers of capital’, who invest in financial products on behalf of investors, while Public & Private side can be called as ‘users of capital’, which include companies who sell themselves to institutional clients to raise finance. You might be serving the institutional side as ‘Equity Researcher’, researching on whether the funds should be invested, or you may be serving the corporate side as an ‘Investment Banker’, advising corporate clients on how to raise finance.
Investment bankers typically perform 3 main functions- raising growth capital, advising and executing Mergers & Acquisition and raising equity capital.
Careers360: Can a person with no technical background (CA/B.Com./B.Tech./BBA) become an Investment Banker?
Srivathsan: Globally, MBA pursued after graduation in the fields of commerce, accountancy and engineering have been the route to become an investment banker. However, there are some phenomenal examples of people without traditionally required backgrounds, becoming investment bankers. A few years ago, Goldman Sachs had hired a Buddhist monk who enrolled in MBA at Wharton to gain business acumen to run a monastery.
Qualifications needed by an Investment Banker
A Bachelors of Commerce or Bachelors of Business specializing in Finance, Economics, Investments, Accounting and Commercial Law proves highly helpful. Nonetheless, it is not unusual for engineering graduates and chartered accountants (CAs) to pursue investment banking. With career as an investment banker, one is expected to possess an impressive knowledge base of financial markets and investments. It has almost become a norm for graduates entering this field to supplement their degrees with a professional degree such as Chartered Accountancy (CA), Masters in Business Administration (MBA) and Chartered Financial Analysis (CFA).
Additional certifications which can aid in job search of an Investment Banker
Aspirants can do summer internships offered by many global investment banks. They can enrol in online courses on banking, stocks, financial markets and investments. Besides that, participating in extra-curricular activities like sports and debating will help them engage with other people and inculcate persuasive abilities.
Strong PowerPoint and MS Excel skills
Analytical and numerical skills
Understanding of finance and business fundamentals
High Emotional Quotient
Salary of an Investment Banker
There is no limit on the money one can earn in the career as an investment banker. Besides bonuses, depending upon the skills, the salary of a fresh graduate can range anywhere between three lakhs to 10 lakhs per year.
Those with some years of experience can earn up to Rs20 lakhs per year and those at expert level can earn up to Rs 36 lakhs annually.
Annual Salary Range*
*Source: Payscale, LinkedIn and Practitioners