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Investment Banking

I NTRODUCTION

Investment Banking as the term suggests, is concerned with the primary

function of assisting the capital market in its function of capital market

intermediation, i.e. the movement of financial resources from those who

have them means investors, to those who need to make use of them

means issuer for generating profit. Banking & financial institutions on the

one hand & capital market on the other hand are two broad Platforms of

institutional intermediation for capital flows in the economy. herefore, it

could be inferred that investment banks are those institutions that are the

counterparts of banks in the capital market in the function of

intermediation in resources allocation. Investment banks carried on

various activities it helps companies and governments and their agencies

to raise money by issuing and selling securities in the primary market.

hey assist public and private corporations in raising funds in the capital

markets both e!uity and debt, as well as in providing strategic advisoryservices for e"pansion ac!uisitions, mergers and other types of financial

transactions.

Investment banking is much wider term than merchant banking as it

implies significant fund based e"posure to the capital market.

Internationally, investment banking have progressed both in fund based &

fee based segments of industry. In India, the dependence is heavily onmerchant banking, more particularly with issue management &

underwriting. #owever downturn in primary market has forced merchant

banks to diversify & become full fledged investment banks. $ver the

decades, backed by evolution & also fuelled by recent technological

developments, investment banking has transformed repeatedly to suit the

needs of the finance community & thus become one of the vibrant &

e"citing segments of financial services. he future for investment banks

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Investment Banking

is bright with scope for merchant banks to convert themselves into

investment banks. uch of the investment banking in its present form,

thus owes its origins to the financial market in '.(.) due to which,

)merican investment banks have been leader in the )merican & *uro

market as well. herefore, the term investment banking can be said to

be )merican origin. heir counterparts in '.+ were termed as merchant

banks since they had confined themselves to capital market

intermediation until the '.+ & *uropean markets & e"tended the scope

of such businesses.


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Investment Banking

TYPES OF PLAYERS IN INVESTMENT BANKING

Full-Service Firms- hese are type of investment banks who have

significant presence in all areas like underwriting, distribution, &),

brokerage, structured instruments, asset management etc. hey are all

rounder -f the game.

Cmmerci!l B!"#s /ommercial Banks operating through 0(ection -1

subsidiaries referring to the subsidiaries formed under section - of the

2lass (teagall )ct which were allowed to carry on limited investment

banking services.

Bu$i%ue Firms-hese are the type of players which specialist in

particular areas of investment banking.

Br#er!&e Firms- hese firms offers only trading services to retail &

institutional clients. hey have huge investor base which is also used by

underwriters to place issues.

Asse$ M!"!&eme"$ Firms- hese firms offer on investment services.

his includes activities like fund management, wealth management, cash

management, portfolio management depending on the type of investors,

tenure of corpus, purpose of investments, type of instrument invested in

etc.

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Investment Banking

STRUCTURE OF INDIAN INVESTMENT BANKING INDUSTRY

Investment banking in India has evolved in its own characteristic

structure over the years both due to business realities & the regulatory

regime.

$n the regulatory front, the Indian regulatory regime does not allow all

investment banking functions to be performed under the entity for two

reasons

4a o prevent e"cessive e"posure to business risk under the one entity.

4b o prescribe & monitor capital ade!uacy & risk management

mechanisms.

herefore bankruptcy remoteness is the key feature in structuring the

business lines of an investment bank so hat the risk & rewards are defined

for the investors who provide resources to the investment banks.

In addition, the capital ade!uacy re!uirements & leveraging capability

for each business have been prescribed differently under relevant

provisions of law.

herefore, Indian investment banks structure their segments in different

corporate entities to able to meet regulatory norms. 5or e.g. it is desirable

to have merchant banking in separate company as it re!uires a separate

merchant banking license from the (*BI. #owever, since banks are

sub6ect to the Banking 7egulation )ct, they cannot perform investment

banking to a large e"tent on the same balance sheet. )sset management

business in the form of mutual fund re!uires a threetier structure under

the (*BI regulations. *!uity research should be independent of the

merchant banking business so as to avoid the kind of conflict of interest.

(tock broking has to be separated into a different company as it re!uires a

stock e"change membership apart from (*BI registration.

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Investment Banking

he Indian investment banking industry has a heterogeneous structure.

he bigger investment banks have several group entities in which the

core & non core business segments are distributed. $thers have either

one or more entities depending upon the activity profile. he

heterogeneous & fragmented structure even if Indian investment banks

are classified on the basis of their activity profile. (ome of such as

(BI,I9BI, I/I/I, I: & 5(, +otak ahindra, /itibank & other offer

almost whole of investment banking services permitted in India. )mong

these, the long term financial institutions transforming themselves into

full service universal banks. hey also have full service investment

banking under their fold. $ther entities such as ;B5/s or subsidiary of

public sector banks mainly offer merchant banking & corporate advisory

services. here are also several others who are providing only corporate

advisory services but prefer to hold merchant banking or underwriting.

Presently, there are no global Indian investment banks although there is

a number of investment banks in India that have some overseas presence

to serve Indian issuers & their investors. )t the middle level are several

niche players including the merchant banking subsidiaries of some public

sectors banks. (ome of these subsidiaries have been either shut down or

sold off in the wake of the securities scams.

#owever certain banks such as /anara Bank & Pun6ab ;ational Bank

have had successful merchant banking activities. )mong the middle level

players are also merchant banks structured as non banking financial

services companies such as 7abo India 5inance :td., )lpic 5inance etc.

here are also in the middle level, some pure advisory firms such as

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Investment Banking

POTENTIAL FOR INVESTMENT BANKING IN INDIA

he bane of Indian capital market today is lack of investor confidence.

his is reflected in the poor performance of both primary & secondary

markets. he causes for e"isting situation are many but primarily arise on

account of lack of li!uidity, unscrupulous issuers & merchant bankers &

poor or unappraised issues. Investment banking can solve this problem

because investor would be dealing with reputed investment banker in the

primary market rather than unknown issuers. he investment banks

whatever be their issue management techni!ues have their own capital on

hold. he issues are likely to be properly appraised & priced & sponsors

on $/*I have a two year lockin period. (imilarly investment banks

would hold the issues until market conditions are appropriate for issue,

thus reducing the risk e"posure of investors in gestation for issue.

oreover, the price of reissue will be a better indicator of issues

performance. Investment banks make the primary market subscription. In

sum, the !uality of pricing, appraisal, & primary market functions will

improve resulting in substantial improvement in investor confidence.

(ince the investment banker lends its name to the issue it will imply an

issue investors can trust. Investment bankers may gradually replace

merchant bankers in India.

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Investment Banking

SERVICE PORTFOLIO OF INVESTMENT BANKS

Investment banks handle significant fundbased business of their own in

capital market along with nonfund service portfolio which is offered to

clients. )ll this activities are segmented across three broad platforms @

e!uity market activity, debt market activity & mergers & ac!uisition

activity. Investment banks differ in the way they conduct their activities.

hese differences may arise due to their evolution, strategies & the way

the strategies are implemented. $ther factors that can influence

investment banking operations are as followsA

ide & narrow geographical presence like global & local firms.

*"tent of integration between the activities.

Inter relationships between activities of relates industries. *.g. )s

those between commercial banks & investment banking industries.

he activities of an investment banks depend upon the service provided.

he services provided by an investment bank can be broadly given

belowC

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Investment Banking

CORE SERVICE PORTFOLIO

;on 5und Based 5und Based

erchant Banking (ervice for

anagement of public offers of e!uity

& debt instruments.

Buy back offers.

Bookrunning

)dvisory & transaction service in

Pro6ect financing,

(yndicate loan

Eenture capital

Private e!uity

Private placements of e!uity & debt

Business advisory & structuring

5inancial restructuring

/orporate reorgani


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Investment Banking

Issue ' securi$ies( u")er*ri$i"& + merc,!"$ !"#i"&

Investment banks play a vital role in primary market. hey are

responsible for finding investors for initial public offering of securities in

primary market. By bringing the buyers & sellers together, they create a

market. (uch sales can take the form of best offers or agency

arrangement. Best offer activity is resorted to in the case of either new or

small companies in whose case of either new or small companies in

whose case underwriting would be risky or established & popular

companies whose issues are enthusiastically received. Investment bankersmay also help as a finder for private placement of securities with

institutions. hey also purchase new issues from security issuers &

arrange for their resale to the investing public. Investment bankers buy

the new issue at an agreed price & hope to resell it at a higher price. In

this capacity they are said to underwriter, or guarantee, an issue. ) group

of investment bankers 6oin together to underwriting syndicate. he

commission received by the investment bankers consist of differential or

spread between purchase & resale prices. he underwriting risk would be

that the issue may not attract buyer at positive differential. Investment

banks put its effort in managing & placement of an issue. Investment

banks helps in issue by helping in deciding type of security, si


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Investment Banking

in '(). (*BI vide its guidelines dated une %%, %HH introduced free

pricing of securities in public offers for the first time in India. he

purpose of this law is to re!uire security issuers to fully disclose all

information that affects the value of their securities. $ver the last ten

years, there have been two distinct phases of primary market boom the

first between %HH%HH? & the second between %HHF--%. he third

wave of the primary market issuers could be shape up in near future. his

market is very closely regulated by (*BI. In the days when the public

offers market is very vibrant, this area of service forms the main activity

for investment banks. In the past few years, through public offers have

been very few, the private placement market, especially in the debt

segment have been very active & has served as an important source of

funds for prime rated corporate. $nce the private placement markets also

come under regulatory stipulations, investment banks would have a wider

role to play in such issuances.

Mer&ers + Ac%uisi$i"s A)visr.

he merger & ac!uisitions industry was pretty nascent in India prior to

%HH8 & continues to be tiny compared to the global scale transactions.

#owever, two main factors that given below given a big push to this

industry areA

he forces of liberali


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Investment Banking

&), other valid merchant banking licences from (*BI also manage the

open offers arising out of such corporate events.

he investment bankers play the role of an advisor in &) deal. he

financing capability of the investment banks is beginning to play a crucialrole in securing the goal. hose firms that have networks with banks &

other financial institutions & thereby can provide finance or have

necessary resources to finance the deal themselves a better chance of

success of deal. Investment banks thus helps in finding a buyerJseller, in

working out the terms of the transaction, financing the structure,

arranging bridge loans. It is necessary that the &) group keep a close

watch on the various industries, companies in order to identify the

potential &) candidate. (imilarly, close relationship with the securities

research people, traders also help to identify the companies vulnerable to

takeovers. he task of doing &) deals begins with analy


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Investment Banking

Asse$ m!"!&eme"$ services

his is a service provided by investment banks to local fund managers for

cross border settlement & administration. It involves receipt of dividends

& interest, subscribing to the right issues & ad6usting portfolio. )ssetmanagement is the unglamorous aspect of investment banking, the

prosaic bank office work of settling traders, making payments, keeping

records & such related tasks. Investment banks provide this service for a

fee to investors such as mutual funds, pension fund & insurance

companies, enabling fund managers to buy & sell securities at home &

abroad. It is a hitech, hivolume, low margin business, revolutioni


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Investment Banking

Sec")!r. m!r#e$ !c$ivi$ies

Investment banks also indulge in proprietary trading. (ome investment

banks have proprietary trading desks which take risk on of institutions

behalf, based on a view of economic & market perceptions &e"pectations. he trader in securities or derivatives for the account of the

firm itself rather than on behalf of its clients. Proprietary trader tends to

take decisions based on detailed technical & fundamental research,

analytic calculations & time series forecasting. he banks incur profit out

of the price movement in the market. (econdly, as a market maker the

trader investment banks take position in the market through purchase &

sale of e!uities, debt & other securities, e"ecute the customer orders &

manage the customers, institutions market risk. Investment banks

perform the following functionsA

he traders of investment banks help in making market. he traders

maintain a position in the stock that their firms has underwritten,

!uote the bid & ask prices & sell at those price. )dvise the salespeople, client & research analysts on the market

activity & pricing for different e!uity issues.

Put ma6or trades together by negotiating with the salespeople, client &

the other dealers.

anage the firms investment risks.

9evelop a sound knowledge about the markets, companies & the

industries.

he commonly traded securities by investment banks include the

sovereign securities, e!uities, money market instruments, investment

grade corporate debt, high yield debt, derivatives, mortgages, etc.

ost of the universal banks such as I/I/I & I9BI & +otak ahindra

have their broking & distribution firms in both the e!uity & debt

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Investment Banking

segments of secondary market. In addition several other investment banks

such ad organ (tanley, 9(P errill :ynch have a strong presence in

this area of activity. In the past few years, the derivative segment has

been introduced in the Indian capital market & this provides an additional

avenue of speciali


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Investment Banking

S!les + Dis$riu$i"

In the present scenario, the financing needs are immense for both

corporates & governments, while the investment managers are constantly

on the lookout for optimal allocation of funds for optimal 7eturns. he

link between the two is filled by investment banks, in particular, by the

sales & 9istribution operations. (ales & 9istribution bring together the

primary issuers & secondary sellers with the buyer of the instruments.

hese could be e!uity, fi"ed income instruments.

In general, there could be two product categoriesA

Institutional sales group

7etail segment

Institutional segment

he salespersons at the investment banks have counterparts at the

institutions. hese counterparts are normally referred to as buy side

analysts or portfolio managers. If the investment banks analyst is

respected, they also act as sellside analyst, as a part of investment

decision.

7etail segment

Investment banks act as an advisor to his clients. #e is more multi

market oriented & can recommend stocks as well as bond unlike

specialists in the institutional product group. he success of a salesperson

reflects not 6ust in his selling abilities, but also his ability to fulfill client

e"pectation

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Investment Banking

Rese!rc,

he research operations of an investment bank are concerned with

studying the economic trends, industry developments, & individual

companies stocks & providing proprietary investment advice to the

institutional clients, & to its sales & trading divisions. he research

division is also an important part of the underwriting process, both in

attracting the clients by their knowledge of clients industry & in

providing a critical link to the institutions that own the clients stocks once

the stocks is publicly traded. )n efficient research team provides aninformation advantage to the investment banks that can use it for inhouse

trading purpose & also can use for the benefit of their clients.

*!uity 7esearch

he *!uity 7esearch division of a securities house or investment bank

provides indepth stock market analysis & a broad perspective &

knowledge regarding the industry trends. hey also provide an insight

into the including valuation of !uoted companies & evaluation of

companies prospects. he research evaluations usually includeA

Industry evaluations, which analy


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Investment Banking

5i"edincome research

he fi"ed income research division provides research focus on the

instruments like corporate debt including investment grade debt, high

yield debt, corporate & portfolio strategy derivatives, mortgage backed

securities, asset backed securities. 5i"ed income research is considerably

more !uantitative than e!uity research. he analysts in this division

assess the fairness of the spreads between the fi"ed income instruments

of different maturities & different risk classes & makes trading

recommendations based on the deviations from the fair spreads, estimatethe value of the options in the mortgages & mortgage backed products.

he fi"ed income research groups work closely with the clients in order

to identify their needs & work to provide customi


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Investment Banking

/e!l$, m!"!&eme"$ services

ealth management services also called as private banking. any

reputed investment banks nurture a separate segment to manage the

portfolio of high networth individuals, households, trust, & other type of

non institutional investors. his can be structured either as a pure

advisory services wherein the investment manager does not have any

access to the funds or as a fund management service wherein the

investment manager is given charge of funds. In the former case, it

becomes it becomes a nondiscretionary portfolio & in the latter case, itbecomes a discretionary portfolio. (uch activity is regulated under the

guidelines. In other case, wealth management may be restricted to a

research based activity wherein in the investors is a provided good

investment recommendation from time to time.

Cr0r!$e A)visr.

Investment banks in India also have large practice in corporate advisory

services relating to pro6ect financing, corporate restructuring through

e!uity repurchase including management of buyback offers under section

DD) of the /ompanies )ct,%H>? raising private e!uity, structuring 6oint

ventures & strategic partnerships & other such value added speciali


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Investment Banking

REGULATORY FRAME/ORK FOR INVESTMENT BANKING

Investment banking in India is regulated in its various facets under

separate legislations or guidance issued under statute. he regulatory

powers are also distributed between different regulators depending upon

the constitutions & status of the investment bank. Pure investment banks

which do not presence in the lending or banking business are governed

primarily by the capital market regulator i.e. (*BI. #owever universal

banks & ;B5/ investment banks are regulated primarily by the 7BI Hin

their core business of banking or lending & so far as the investment

banking segment is concerned, they are also regulated by (*BI. )n

overview of the regulatory framework is furnished belowA

%. )t the constitutional level, all investment banking companies

incorporated under the /ompanies )ct %H>? are governed by the

provision of the act.

. Investment banks that are incorporated unde8r a separate statute such

as the (BI or the I9BI are regulated by their respective statue. I9BI is

in the process of being converted into /ompanies )ct.

3. 'niversal Banks are regulated by 7BI of India under the 7BI )ct%H38 & the Banking 7egulation )ct which put restrictions on the

investment banking e"posures to be taken by the banks. he 7BI has

rela"ed the e"posure limits for merchant banking subsidiaries of the

commercial banks. ill now, such companies were restricting their

e"posure to a single entity through the underwriting business & other

fund based commitments such as standby facilities etc. to >K of their

net owned funds. herefore these companies are now on par with

%H


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Investment Banking

other investment banks which can do so upto - times their net owned

fund.

8. Investment banking companies that are constituted as nonbanking

financial companies are regulated operationally by the 7BI under

/hapter IIIB section 8># & 8>LB of the 7BI )ct, %H38. 'nder these

sections 7BI is empowered to issue directions in the area of resources

mobili. 5unctionally, different aspects of investment banking are regulated

under the securities & *"change Board of India )ct, %HH & the

guidelines & regulations issued under. hese are listed belowA

erchant banking business consisting of management of public offers

is a licensed & regulated activity under the (*BI )ct 4erchant

BankersG, %HH.

'nderwriting business is regulated under the (*BI 4underwritersG

7ules & 7egulations, %HH3.

he activity of secondary market operations including stock broking

are regulated under the relevant bylaw of the stock e"change & the

(*BI 4stock broker & sub brokerG 7ules & 7egulations, %HH. Besides

for restricting unethical trading practices, (*BI has issued the (*BI

4Prohibition of fraudulent & unfair trade practices relating to securities

marketsG 7egulations %HH>& also (*BI prohibited insider trading

under regulations, %HH.

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Investment Banking

he business of asset management as mutual funds is regulated under

the (*BI 4utual 5undG 7egulations, %HH?.

he business of portfolio management is regulated under the (*BI

4Portfolio mangersG 7ules & 7egulations, %HH3.

he business of venture capital & private e!uity by such funds that are

incorporated in India is regulated by the (*BI4venture capitalG

7egulations,%HH? & by those that are incorporated outside India is

regulated under the (*BI 4 5oreign venture capital fundsG

7egulations,---.

he business of institutional investing by foreign investment banks &

other investors in Indian (econdary markets is governed by the (*BI

45oreign Institutional InvestorsG 7egulations %HH>.

?. Investments banks that are set up in India with foreign direct

investment either as 6oint ventures with Indian partners or as fully

owned subsidiaries of the foreign entities are governed in respect of

the foreign investment by the 5oreign *"change anagement )ct,

%HHH& 5oreign *"change anagement 4ransfer or issue of a person

resident outside IndiaG 7egulations --- issued there under as

amended from time to time through circulars issued by the 7BI.

D. )part from the above specific regulations relating to investment

banking, investment banks are also governed by the other laws

applicable to all other underwriting support on government securities

issue & participate in auctions held by the 7BI.

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Investment Banking

SKILLS SUGGESTED FOR INVESTMENT BANKERS

Tec,"ic!l S#ill

Ac!)emic B!c#&ru")-In the early days of investment banking, not

much importance was attached to academic background. oday, the

business has become very complicated and the skill re!uirements have

multiplied. /onse!uently, investment banks find it important to recruit

people with the right academic credentials. ypically, for most of the

important 6obs, an B) is a must. Investment banks rely heavily on

campus recruitments

C"ce0$u!l Su")"ess-$ne of the ma6or benefits for a professional

in an investment bank is the learning associated with work. he

financial skills of an e"pert are tested to the core while handling a

complicated deal. /omprehensive and indepth knowledge of financial

and business concepts are essential to sustain business. ultiple

relationships between various factors render decisionmaking difficult.

5inancial solutions can be provided to the clients only when the

advisor is competent to understand all or at least a ma6ority of them.

Before practical solutions emerge, the tools for decisionmaking will

give greater choice to the solution provider. ) strong grounding in

theory and concepts facilitates this.

Pr)uc$ S0eci!li1!$i"- $ne way to speciali


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Investment Banking

would suit their risk profile should be identified. he clients will also

feel at home while dealing with a product specialist.

Le&!l K"*le)&e-hile clear cut guidelines can be issued to the

traders regarding their market related activities that are governed by

the law, the comple"ity multiplies for an &) deal. he regulators

guidelines have to be strictly followed, even while envisaging a

combination. :egal knowledge is also important for structuring such

deals, which will help identify the constraints associated with

proposed solution. he situation gets more intense when the deal is acrossborder &) proposal. )part from the knowledge of the inland

laws, foreign laws also have to be considered. )ny regulation by the

foreign government can make an otherwise desirable deal, unviable.

K"*le)&e ' C!0i$!l M!r#e$s !") Fu"c$i"i"&- ore than any

other industry, it is the investment banking industry that has a direct

bearing on the way capital markets function. )ny changes in thecapital market regulations affect the brokerage side of the business,

along with the trade clearing and settlement houses. he trading

personnel should be conversant with the regulations, guidelines,

procedural formalities and actual trade e"ecution processes involved

in capital market. *.g. rading system involves a lot of additional

skills than online trading. #e has to be conversant with the codes,symbols and conventions followed by the market. Luick signaling and

accurate interpretation are of utmost significance. )ny mistake in

these would lead to faulty e"ecution of orders and might entail

additional costs to the firm in correcting the errors.

K"*le)&e ' Re&ul!$r. B)ies i"vlve) i" $,e V!rius

O0er!$i"s-It is necessary for an investment banker to be aware ofall the regulatory bodies that govern the activities in which heJshe is

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Investment Banking

involved. ) thorough knowledge of all such bodies is absolutely

essential to perform e"traordinarily. In India, the (*BI & central bank

acts as a watchdog and regulator of market related activities.

K"*le)&e ' I"$er"!$i"!l Busi"ess Sce"!ri !") Ec"micTre")s2-hough a researcher is primarily involved in economic and

business cycle studies, it is the duty of all the investment bankers to

have a general overview of these affairs. (alespersons, who also act as

financial consultantsJadvisors, should essentially be aware with

economic and business cycles, lest they lose the respect and trust of

the client. he re!uirement for global perspective and international

e"posure is becoming increasingly important. he firm should offer

services across the national borders to the corporate clients and

informed services are possible only when the employee is well

e!uipped with international business information.

K"*le)&e ' S'$*!re Tls( Devel0me"$s i" $,e Fiel) 'I"'rm!$i" Tec,"l&.-$ne of the most important technical skills

is the usage of computers, tools and internet technologies. arketing,

brokerage, research and capital mobili


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Investment Banking

Cmmu"ic!$i" S#ills

Aili$. $ C!$er $ $,e Au)ie"ce Accr)i"& $ i$s

A*!re"ess Levels-/ommunication skills include both the means of

communication M written and oral. #owever, the audiences vary

e"tensively, and hence, the re!uisite communication skills also differ

widely. ) marketer handling individual investors will necessarily have

to keep the content very simple and e"press t in laymans terms. 'sage

of financial terms & 6argons will not fetch results. /ash flows, the

characteristics of the instruments & the risk class to which the

investment belongs to must be e"plained in simple & easily

understandable terms.

Ne&$i!$i" S#ills ;egotiation skills is important at a variety of

places. Institutional clients have to be convinced about the prospects

of the investments that are solicited by the firm. Investors in

syndicated debt must be satisfied with the payment streams and

interest rate terms. &) transactions are the toughest assignments for

negotiations. *ven a friendly transaction would be difficult if not for

patient and mutually negotiations. he common issues that pertain to

negotiation are M terms of offer, offer price, post merger integration,

organi


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Investment Banking

clients & team members. It is essential when solutions are to be

identified for comple" problem. Innovations & creativity are re!uired

structure deals.

O$,er S#ills

M!r#e$i"& S#ills- he marketing skills would be an

application of skills mentioned above. $ne of the important marketing

skill would be relationship management. 'nlike most other industries

where relationship plays a facilitating role in conducting business, it is

fundamental issue in the investment banking industry. )n attitude for

creating, establishing & maintaining relationships, during boom &down period, is of utmost importance in getting mandates.

I"$er-Pers"!l S#ills-Interpersonal skills are basically blended from

communication skills, and personality traits. hey include interactions

with superiors, subordinates, colleagues, clients, competitors, team

members and even politicians and public office bearers. Interpersonal

skills come to the fore during team e"ercises where diplomacy and

manners become essential. eam e"ercises can also include dealing

with members from other departments or even with other firms. (uch

situations call for greater application of team skills and an element of

mutual respect towards each other.

Ne$*r#i"& S#ills-;etworking refers to the process of developing a

web of contacts and ac!uaintances. (ome of the special attributes

re!uired to develop networking abilities would includeA

N +nowledge of human psychologyO

N Presence of mind to apply the appropriate skills as situation demandsO

N )pproaching through proper channels that would lend credibility

respectability to contactsO

N Persuasion skillsO

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Investment Banking

N #ighest standards of professionalism.

ROLE OF INVESTMENT BANKERS IN DEVELOPING AN

ECONOMY3

InvestmentBankers

Banks &

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InvestmentInstitutions

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economyG

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oney arket

4financial

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2old etc 4realeconomyG

/ommodity

futures arket

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Business activity

Production of

goods andservices 4real

economyG

Investors4generate

savingsG

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Investment Banking

E4PLANATION

%G InvestorsA Investors are the persons who generate savings. he

investors who generate savings will definitely like to earn something

out of it rather keeping the funds idol. (o the !uestion of investment

arises and with the investment risks arises. (o for proper and safe

deployment of funds investment bankers help them in the process of

investing their funds.

G 7ole of investment bankersA he investment bankers act as an

intermediary between the investors and capital market which consists

of primary market and secondary market. he investment bankers with

their intense research guide them to invest their money in banksJ5I,

/apital and money market, foreign e"change market, commodity

market, real estateJgold etc. Proper deployment of funds will help the

investors to earn good returns with safety of their initial invested

funds.

3G Business )ctivityA )ll these investments from the investors will lead

to business activity in different sectors. he funds deployed by the

investors will be utili


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Investment Banking

profits for the user of the funds because of utiliGBest Broker In India

he company has a fullfledged research division involved in acro

*conomic studies, (crotal research and /ompany (pecific *!uity

7esearch combined with a strong and well networked sales force which

helps deliver current and up to date market information and news.

+otak (ecurities :td is also a depository participant with ;ational

(ecurities 9epository :imited 4;(9:G and /entral 9epository (ervices

:imited 4/9(:G, providing dual benefit services wherein the investors

can use the brokerage services of the company for e"ecuting the

transactions and the depository services for settling them.

+otak (ecurities has % branches servicing more than %, D-,---

customers and coverage of %FD cities. +otaksecurities.com, the online

division of +otak (ecurities :imited offers Internet Broking services and

also online IP$ and utual 5und Investments. +otak (ecurities :imited

manages assets over >-- crores of )ssets under anagement 4)'G

H


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Investment Banking

.he portfolio anagement (ervices provide top class service, catering to

the high end of the market. Portfolio anagement from +otak (ecurities

comes as an answer to those who would like to grow e"ponentially on the

crest of the stock market, with the backing of an e"pert.

AREA OF BUSINESS FOR KOTAK SECURITIES

+otak (ecurities has five main areas of businessA

I"s$i$u$i"!l Busi"ess

his division primarily covers secondary market broking. It caters to the

needs of foreign and Indian institutional investors in Indian e!uities 4both

local shares and 297sG. he division also incorporates a comprehensive

research cell with sectoral analysts who cover all the ma6or areas of the

Indian economy.

Priv!$e Clie"$ Services

Private /lient (ervices 4P/(G is a special investment division for #igh

;etworth individuals, retail investors, ;on7esident Indian investors,

trusts, corporates and banks. he investment product range at P/( is

among the widest in the country and covers debt and e!uity, mutual funds

and specialised structured investment products.

Clie"$ M"e. M!"!&eme"$

his division provides professional portfolio management services to

high networth individuals, retail investors, and corporates. Its e"pertise

in research and stock broking gives the /ompany the right perspective

from which to provide its clients with investment advisory services.

Re$!il )is$riu$i" ' 'i"!"ci!l 0r)uc$s

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Investment Banking

+otak (ecurities has a comprehensive retail distribution network,

comprising appro"imately D--- agents, %3 branches and over -

franchisees across India. his network is used for the distribution and

placement of a range of financial products that includes company fi"ed

deposits, mutual funds, Initial Public $fferings, secondary debt and

e!uity and small savings schemes.

De0si$r. Services

+otak (ecurities is a depository participant with the ;ational (ecurities

9epository :imited and /entral 9epository (ervices 4IndiaG :imited for

trading and settlement of demateriali


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Investment Banking

PRODUCTS OF KOTAK SECURITIES

$nce you invest with +otak (ecurities, you can en6oy access to a wide

range of products and services to help you make the most of your

investments.

E!s. E%ui$.A ant your capital to appreciate fastQ Invest in *asy *!uity.

aG (ms )lerts

bG /all & rade

cG op 2ainers and :osers notification

dG (uper multiple

eG Portfolio racker

E!s. Deriv!$ivesA he higher your risk, the greater the returns on your

investments.

aG Put /all ratios

bG op value traded

cG $pen interest

dG (tock futureJ(tock options

E!s. IPO2Invest early for greater returns.

aG 5orthcoming issues

bG ;ew listings

cG /all & rade

dG IP$ news

eG $pen issues

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Investment Banking

E!s. Mu$u!l Fu")2 :ooking to diversify your riskQ Invest in *asy

utual 5und.

aG 5ind out ;)E of a (cheme

bG Eiew (cheme details

cG utual fund ;ews

dG /ompare (chemes

eG y portfolio

E!s. I"sur!"ce2(ecure your future and your familys. heres more to

insurance than 6ust security.

aG #ow does the plan workQ

bG )dvantages of the plans

cG *ligibility

dG $ther Benefits

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Investment Banking

ACCOUNT TYPES

he first !uestion in an individuals mind where to open an account

ant to start investingQ $pen an investing account with +$)+

(*/'7II*( and begin right away. hether you are a beginner or an

e"pert trader, they have different accounts to suit your needsA

K$!# G!$e*!. Accu"$2

If you are new to trading, +otak (ecurities opens the gateway to a world

of investing opportunities for you online and onphone. heir indepth

research will guide you in making smart investment decisions. $pen the

+otak (ecurities 2ateway )ccount and get started.

Yur Be"e'i$s2

+otak (ecurities +nowledge /enter that helps you learns more

about stock markets and investments.

*n6oy higher returns by investing early through *asy IP$.

7esearch 7eports on the economy, select industries and

companies help you make informed investment decisions while

dealing in *asy *!uity.

7esearch advice via +otak (ecurities (( alerts, so you dont

miss out on important buying and selling opportunities.

Buy and sell stocks on phone using /all & rade.

)ccess to %8 topperforming mutual funds through *asy utual

5und.

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Investment Banking

5ree news and market updates.

*"posure of upto %> times your initial margin on select stocks

with (uper ultiple.

5* $ !c$iv!$e6

=ou can activate +otak (ecurities 2ateway with any amount between 7s

-,--- to >, --,---J as margin. his can be in form of cash deposit or the

value of the shares you buy.

O0e" .ur !ccu"$2

(tep %A o open your account, simply download and print an application

form, fill it in and post it along with the essential documents to the

address as mentioned in the form.

=ou can call them and they will have their representative meet you and

help you open the account

=ou can also email them at gatewayRkotaksecurities.com. heir

representative will get in touch with you.

(tep A hey will inform you as soon as your account is activated, and

you can start trading instantly

his procedure is common for all accounts.

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Investment Banking

K$!# V!lue Accu"$2

Becoming a wise investor re!uires a good deal of research and education.

=ou must learn not only how stocks and mutual funds work, but also to

make your own investment decisions. he +otak (ecurities Ealue

)ccount is specially e!uipped to make investing simpler for you.

Yur e"e'i$s2

+otak (ecurities +nowledge /enter that helps you learn more

about stock markets and investments.

heir 7esearch 7eports on the economy, select industries and

companies help you make informed investment decisions while

dealing in *asy *!uity.

Buy and sell stocks on phone using /all & rade.

Invest in IP$s with *asy IP$.


5unds.


miss out on important market movements.


he facility to trade in amounts > times greater than your

capital.

:ower delayed payment interest.

)ccess to +.*.). 9esktop specialised financial software that

makes trading easier.

3?


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Investment Banking


with (uper ultiple

5* $ !c$iv!$e6

=ou can activate +otak (ecurities Ealue with any amount between 7s.

>, --,---J and 7s. %-, --,---J as margin. his can be in form of cash

deposit or the value of the shares you would have currently.

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Investment Banking

K$!# Privile&e Circle Accu"$

+otak (ecurities offer you nothing but the best. )t +otak (ecurities, they

make sure you get to en6oy premier and topline trading services with

+otak (ecurities Privilege /ircle

Yur e"e'i$s2

) dedicated Privilege /ircle customer service desk offers you

assistance in opening accounts, handling daytoday problems,

and more.

Independent market e"pertise and support through a dedicated

relationship manager.

Place orders phone through /all & rade.

)ccess to *asy IP$ and %8 topperforming mutual funds

through *asy utual 5unds.


companies.



? times e"posure on the margin.

)ccess to +.*.). Premium an e"clusive premium analysis

tool with > Indicators for echnical )nalysis, 9erivative

/hains, ultiple atchlists, and more.

:owest delayed payment interest.

3F


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Investment Banking


with (uper ultiple

5* $ !c$iv!$e6

=ou can activate +otak (ecurities Privilege /ircle with any amount more

than 7s. %-, --,---J as margin, by way of cash or stock

K$!# 5i&, Tr!)er Accu"$2

5or daily traders, they have the +otak (ecurities #igh rader e"posure

an account specially designed for intraday traders. his is an )uto

(!uare $ff product where you can en6oy the benefits of intraday trading.

)ll open orders will be automatically s!uared off at 3.%- pm.

Yur e"e'i$s2

? times e"posure on the margin.



)ccess to +*) Premium an e"clusive analysis tool with >

Indicators for echnical )nalysis, 9erivative /hains, ultiple

atchlists, and more.

Intra day calls from our e"perts for a nominal fee.

heir 7esearch 7eports on the economy, select industries andcompanies.





5unds.

Place a paperfree order for IP$, through *asy IP$.

3H


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Investment Banking

5* $ !c$iv!$e6

=ou can activate +otak (ecurities #igh rader with any amount less than

7s >, --,---J as margin, by way of cash or stock.

K$!# Free*!. Accu"$2

rading unlimitedS +otak (ecurities 5reeway enables you to trade asmany times as you like at a fi"ed brokerage. ust pay a fi"ed brokerage

of 7s. HHHJ a month and trade as many times as you want

Yur e"e'i$s2

8 times e"posure on the margin.



Intra day calls from our e"perts for a nominal fee.


sectors and companies.





5unds.

Place a paperfree order for IP$, through *asy IP$.

5* $ !c$iv!$e6

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Investment Banking

=ou can activate +otak (ecurities 5reeway with any amount less than 7s.

%, >,---J as margin, by way of cash or stock.

PLANNING /IT5 KOTAK

hy you need to planQ

hen it comes to important life goals it is important to develop a

financial roadmap to move your goals forward and to help you make the

most of lifes changes.

=ou need to plan to protect yourself and your family against financial

risks. (ure, no financial planner can protect you from the risks you face in

life. But good financial planning can protect you from suffering the

financial loss that may result when any of those risks become reality.

(tep %A (ound financial planning can help you chart a clear course to your

retirement goals. (o no matter whether youre 6ust starting out or

approaching the end of your career, +otak (ecurities provides you with

comprehensive planning and support.

(tep A Plan ta"es as ongoing process and not a onetime event. 2ood

planning will increase your afterta" cash flows, and may mean greater

savings during ta" time.

(tep 3A ake your money work smarter and harder. 2et higher returns

from your investments. #eres how.

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Investment Banking

(ay if you were to invest 7s. %--. a"saving schemes like Post $ffice

(chemes, utual 5unds and 2overnment Bonds are safe and longterm

avenues. 5i"ed 9eposits also give you a >.>KT interest, while the share

market brings you returns of %F.FFKU.

PORTFOLIO MANAGEMENT

hy Portfolio managementQ

)s you drive towards your ob6ective of creating wealth, you need to

employ the right investment vehicles, at the right time. 2iven the

unpredictable nature of e!uity markets, staying on course re!uires e"pert

maneuvering, time and effort.

hats where Portfolio anagement comes in. It gives your portfolio the

edge by skillfully sifting through available investment opportunities to

help you reduce risk and ma"imi


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Investment Banking

hrough !uarterly account performance statements, delivered to your

doorstep.

G )i&i$!l( s$!. u0)!$e)

hey email all your financial statements to you, doing away with the

hassle of paperwork.

/,e" i" )u$( 8us$ !s#

+$)+ (*/'7II*( have a dedicated website and a customer service

desk to address all your !ueries, anytime.

REASEARC5 OF KOTAK SECURITIES

K$!# Securi$ies Rese!rc, Ce"$er

elcome to the +otak (ecurities 7esearch /enter the special research

cell where some of Indias finest financial analysts bring you intensive

research reports on how the stock market is faring, when is the right time

to invest, when to e"ecute your order and more. 9epending on what kind

of investor you are, they bring you fundamental or basic research and

technical research. )s an investor with +otak (ecurities, you get access to

these research reports e"clusively. =ou get access to the following

reports.

I"$r!)!. c!lls2

hese calls are provided according to changing market situations. Be it

news, momentum or technical perspectivesO be updated with what our

e"perts advise you to do during the market hours.

S0eci!l Re0r$2

hese reports give you an in depth coverage on special events such as the

Budget 7eport, Luarterly results, 7BI /redit & onetary Policy,

onsoon 7eport and much more.

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Investment Banking

M!r#e$ Mr"i"&2

) technical view summari


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Investment Banking

Deriv!$ive Re0r$s2

=ou can view the put call ratio, the most active derivative contracts and

the top change in open interest. =ou can also get 5II (tatistics, the top

gainers and losers and the cost of carrying out various derivative

contracts.

Pr$'li A)vice2

=ou can avail the advice of our e"perts by simply writing an email to

them. hether it is on choosing a stock or sector or anything regarding

investments all your !ueries will be answered. If you need advise simply.

K$!# Securi$ies SMS Aler$s2

)nd last, but not the least, you can get these e"pert tips and

recommendations as (( on to your mobile phone.

K$!# Securi$ies Rese!rc, A)v!"$!&e2

/heck out the returns on investments that our clientele has en6oyed over

the past year.

MUTUAL FUND RESEARC5

Mu$u!l Fu") Rese!rc,

hen you decide to invest in a utual 5und, selecting from hundreds of

utual 5unds can get tough. ith utual 5und 7esearch, you can take

your pick easily from e!uitybased or debtbased funds, to growth funds

or dividendbased funds.

9uic# Rese!rc, 'r i"ves$me"$s

2et access to indepth research. $r


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Investment Banking

A"!l.se *i$, i"-)e0$, rese!rc,

2et independent research with reports, ratings, and rankings from e"pert

analystsO plus, insight into current analyst recommendations and their

historical performance.

M"i$r .ur i"ves$me"$s

2et breaking news and set alerts for your portfolio, and track

performance with watch lists

INVESTING /IT5 KOTAK SECURITIES

)t +otak (ecurities, this is precisely what they believe in. hey are

committed to make trade easy for you. hey understand your level of

e"pertise in trading and provide you solutions to fit your needs whether

you are a beginner, a seasoned investor or a professional trader. hey can

help you invest wisely while taking into account, the amount you wish to

invest. +otak (ecurities conducts research for all class of customers.

Be&i""ers

:ooking to invest but dont know where and howQ ondering whether

online trading would be a good and reliable way to investQ )t +otak

(ecurities, they make online investing really easy for you so you can

trade from the comfort of your home or office, or even while you are on

the move.

Se!s"e) I"ves$rs

2iven the volatile nature of the stock markets, you can never be really

sure of getting stable returns every time, from your investments. If you

have a family to look after, the need for planning your investments in the

long run becomes greater than ever. (o whatever youre life goals,

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Investment Banking

investing wisely could make all the difference between a fortune gained

and an earning lost. +otak (ecurities, help you plan investments keeping

your future in mind.

Su0er Tr!)er

If the research for beginners and seasoned are taken care of by them,

super tradersMhaving a huge volume of transactions, who are dedicated

customers, research is conducted to ma"imi@

orstG

% 3

8D

YES NO


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Investment Banking

8 >

>G hich facility of +otak (ecurities do you appreciate the mostQ

*asy *!uity *asy

9erivatives *asy IP$

*asy utual 5und *asy

Insurance

?G #ow do you find the customer relationship management of +otakQ7ate it on the scale belowQ Between %> 4%@ 2ood, >@ orstG

% 3

8 >

DG #ow do you find follow up services of +otak securities in terms ofonthly reports and othersQ 7ate it on the scale below between %

>Q 4%@ 2ood, >@ orstG

% 3

8 >

FG )ny limitations to +otak (ecuritiesQ

8F


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Investment Banking

MARKET SURVEY RESULT FOR KOTAK SECURITIES3

%G )re you familiar with +otak (ecuritiesQ

otal ;o of Person =es 4KG ;o 4KG

>- H- %-

G 9o you have an account with +otak (ecuritiesQ If ;o, han please

(pecifyQ

otal ;o of Person +otak 4KG #95/ 4KG I/I/I 4KG $thers 4KG

8- 8- > - %>

8H


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Investment Banking

3G )re you satisfied with the services provided by +otak securitiesQ

otal ;o of Person =es 4KG ;o 4KG

8- ? 3F

8G #ow do you find the portfolio management services of +otak

securitiesQ #ow do you rate on the scale belowQ 4%@ 2ood, >@

orstG

otal ;o of Person % 4KG 4KG 3 4KG 8 4KG > 4KG

8- 88 3 %> %% D

>-


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Investment Banking

>G hich facility of +otak (ecurities do you appreciate the mostQ

otal ;o

of Person

*asy

*!uity

4KG

*asy

IP$

4KG

*asy

9erivatives

4KG

*asy

utual

5und 4KG

*asy

Insurance

4KG

8- 38 %3 33 %3 D

?G #ow do you find the customer relationship management of +otakQ

7ate it on the scale belowQ 4%@ 2ood, >@ orstG


8- 3% D %D %3 %

1 (%)44%

2 (%)23%

3 (%)15%

4 (%)11%

5 (%)7%

1 (%)

2 (%)3 (%)

4 (%)

5 (%)

>%


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Investment Banking

DG #ow do you find follow up services of +otak securities in terms of

onthly reports and othersQ 7ate it on the scale belowQ 4%@ 2ood, >@

orstG


8- 8- D %- %3 %-

FG )ny limitations to +otak (ecuritiesQ

:II)I$;(

>


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Investment Banking

)fter conducting the survey the limitations !uoted were as follows

%G :ack of Branches or 5ranchisee for trading purpose.

G elephonic transactions are at times difficult.

3G 9ifficulty in internet trading sometimes due to technical

problem in loading of sites.

8G ;o proper marketing strategy.

;oteA Percentage rounded off to nearest figures.

RECOMMENDATIONS3

)fter studying the working of +otak (ecurities for ;onInstitutional

investors 4Investment Banking for general publicG and taking into account

the survey report they should further improve the !uality of services

provided by them in regards with transaction statement and the other

limitations which are !uoted by the public.

+otak securities should increase their network of branches according to

customer database and also area wise. It should be done gradually as it

re!uires lots of capital and it should also not affect the company as awhole.

If the above recommendations are put into action by +otak (ecurities, it

will improve its profitability and goodwill of the company along with

customer satisfaction.

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Investment Banking

CONCLUSION

he future of investment banking industry as a whole looks bright. any

more pure merchant banks & advisory firms could convert themselves

into full service investment banks that would broaden the market & make

the service delivery much more efficient. In addition, the technology &

market developments shaping the capital market would also provide an

added path to the growth of investment banking. Better regulatory

supervision & stricter enforcement of the code of conduct of market

intermediaries would ensure better issuers come to market & e"isting

issuers would follow enhanced standards of corporate governance. In

long run, all these developments would ensure fair returns to investors, &

encourage them to invest in the market. his would lead to growth for

capital market in general & investment banking industry also.

(o hereby I conclude that +otak (ecurities is an upcoming brand, in the

area of security business 4Investment BankingG, trying hard to providevarious services and facilities to their clients. ;ow as per their recent

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Investment Banking

strategy they are tying to capture retail investors, in order to increase their

goodwill in the market. In future the company will e"pand and diversify

its business in terms of new products and innovations in e"isting products

to cater to the needs of their valuable customers.

BIBLIOGRAP5Y3

(ourceA

Investment Banking)n $dyssey in #igh 5inance

Pratap (ubramanyam.

anaging Investment Banks )n Introduction

I/5)I

anaging Investment Banks )dvance opic

I/5)I

/IBLIOGRAP5Y3

(ourceA

www. kotaksecurities.com

www.google.com

>>


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