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Priyanka Prajapati | Investment Banker

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Finance is one of the most important fields in any department, business or education segment. Nowadays, people are realizing the need of finance and its various fields. But before going into depth of finance, let’s first understand the meaning of Finance.

Finance is a term used for management of money, estimation of need of finance and generation funds in any entity. It covers all areas associated with Banking, Capital Markets, Money Markets, Investments, Credit etc.

Finance is majorly divided into 3 categories-

  • Finance for people (Personal Finance),
  • Finance for Businesses (Corporate Finance)
  • Finance for Government (Public Finance). 

Finance has very wide applicability and there are a large number of companies which have started recruiting finance professionals with sound finance knowledge. Finance is a very important division in any company which comprises of CFO and Financial Analysts. Other than the Finance Division, there are companies which are solely operating under the finance Industry known as Financials Institutions (FIs).

Financial Institutions cover Banks (Includes Large Banks, Retail Banks and International Banks), Insurance Companies, Brokerage Firms, Investment Banking Companies, Consulting Firm, Finance KPOs, Private Equity Funds, Hedge Funds, Merchant Bankers etc. These FIs demand large no. of finance personnel and offer them considerably a good amount of package (starting from INR 10 Lakh).

To build the career in finance, it is required to attain the finance knowledge either through MBA or finance courses. Here, in this article, I will be listing some courses which can help you build your career in Finance.   

Certified Financial Analyst (CFA)

CFA is a post-graduation certification provided to Students/ professionals working in the finance Industry by CFA Institute. The Certification is globally accepted and highly accredited. It is very influential for recruiters and recruiters give a high weightage to CFA charter-holders. CFA charter- holders straight away gets recruitment at Analyst/ Senior Analyst or Associate level.

CFA has 3 levels of examination; CFA Level 1, level 2 and Level 3 and takes around 3 years to complete. One can appear for the next level only if they cleared till the previous level.

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  • Subjects: Quantitative Methods, Ethics, Economics, Financial Reporting, Corporate Finance, Equity, Fixed Income, Derivatives etc.
  • Fees Structure: Enrolment Fees– USD 450 and Exams Registration Fees- USD 700- 1,450 for each level
  • Functional Area: Portfolio Manager, Equity Research Analyst, Investment Banking Analyst, Mutual Funds etc.
  • Institutes for CFA Coaching: The Wallstreet School, Analyst Prep, Fintree etc.
  • CFA Institute Website Link: https://www.cfainstitute.org/

For more information, refer to CFA Blog

Course on Equity Research

One of the major key finance areas is into capital markets and Equity Research. The demand is rising for Equity Research Analysts especially in India because of the growing Stock Exchanges markets; NSE, BSE, others etc. and growing brokerages firms. The course provides in-depth knowledge of stock market and helps in analyzing public traded companies.

The course is getting a lot of traction these days in India as more companies are filing for IPOs and more individuals are starting to invest in Stock Markets (which is currently only 2% in India). The major attractive part is incentives associated with the profile.

  • Functional Area: Equity Research Companies, Brokerage Houses, Hedge Funds etc.
  • Institutes offering the Course: BSE Institute, NSE India, Kredent Academy etc.

Financial Risk Manager (FRM)

FRM is another highly accredited course provided exclusively by GARP (Global Association of Risk Professionals). FRM is the study of any Business/ firm through estimation of various risk profiles; Company Risk, Market Risk, Operational Risk, Credit Risk etc. There are no specific eligibility criteria for entering and passing the FRM exam.

FRM is an option for those individuals who aspire to make their career into risk associated profiles like hedge funds and Banks dealing in Money Markets. People generally confuse FRM with CFA exam and use the words together, however, there are lots of difference in the two. Furthermore, for becoming FRM, one has to only clear 2 parts/ levels of exam.

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  • Subjects: Risk Management, Quantitative Analysis, Valuation & Risk Models, Operational Risk, Market Risk, Credit Risk etc.
  • Fees Structure: Enrolment Fees– USD 400 and Exams Registration Fees- USD 425- 725 for each part
  • Functional Area: Hedge Funds, Commercial Banks, Insurance Companies etc.
  • Institutes for FRM Coaching:
  • GARP Institute Website Link: https://www.garp.org/

For more information, refer to FRM Blog

Course on Financial Modeling & Investment Banking

Another key area in Finance is Investment Banking wherein the knowledge of financial modeling is required. With the emergence of finance fields and startup ecosystem, the companies are realizing the need of funds which helps them to grow and an Investment Banker helps companies to raise funds from the markets (from investors, funds etc.).

It you really aspire to be in an Investment Bank, knowledge of financial modeling is an important factor for job selection.  Employers give higher weightage to candidates having knowledge of Financial Modeling.

And, let’s understand the term financial Modeling first. Financial Modeling is a study of company’s past financials and a process of projecting the future financials (Statement of Profile & Loss Account, Balance Sheet and Cash Flow Statement). The Course will include teachings on preparation of full financial model from scratch.

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  • Functional Area: Investment Banking Companies, Private Equity Funds etc.
  • Institutes offering the Course: There are some Institutes which also provide course on full Investment Banking which gives the teaching based on the day to day activities of Investment Banker. The WallStreet School, Imarticus, Edupristine etc.

For more information, refer to Blog on Financial Modeling- A complete Overview

Course on Corporate Finance

Corporate Finance is an integral division of finance which takes all the decisions pertaining to financing whether in taking investment decisions, budgeting decisions etc. The major role of corporate finance team is to generate efficiency and profitability in the business and maximize the interests of shareholders by creating more wealth in the business.

Major Scope of Corporate finance lies in 3 business decisions- Investment decisions, financing decision and dividend decision. All the decisions are crucial to any company for the purpose of maximizing the return on investment and thus the corporate finance division yields more value to the management and shareholders.

  • Functional Area: Finance Division of Multinationals and big corporates
  • Institutes offering the Course: There are various institutes which offer courses on corporate finance and it is also taught as a subject in Business Schools as a part of their curriculum. For Eg. Corporate Finance Institute, Coursera, Udemy etc.

VC or Venture Capitals funds are getting a lot of traction these days in the startup world. If you have worked in any startup and if you have come across the business functioning of startups whether in India or abroad, I’m sure you might have heard of this term.

Venture capitals play a pivotal role in startup ecosystem. They provide the funding support, technical know-how and operational efficiency to startups which are either burning cash (making losses) or looking to grow.

Usually people misunderstand between Private Equity funds and Venture Capital Funds but there is a lot of difference in the both. Private equity funds generally lend to companies which are already profitable, acquired a decent market share and looking for further expansion or growth.

On the other hand, Venture Capital funds lend to smaller and growing companies which are at a nascent stage and making considerable revenues. They might or might not be profitable but the companies has potential to grow faster in future.

Here in this article, I will be listing the details of various Venture Capital Funds in India which are active and predominantly investing in the emerging startups 

List of VC Firms actively investing in India

1. Sequoia Capital:

Sequoia Capital is an American Venture Capital fund. The fund has been founded in 1972 and is headquartered in California. It is actively involved in investing across sectors and is currently managing a corpus USD 1.4 trillion.

  • India Office: Bengaluru, New Delhi, Mumbai
  • Sector Focus: Energy, Financial, Enterprise, Healthcare, Internet, and Mobile Startups
  • Ticket Size: Early Stage- USD 1- 10 Million 
  • Growth Stage- USD 10- 100 Million
  • Website: https://www.sequoiacap.com/india/

2. Jungle Ventures:

Founded in 2012, Jungle Ventures is a Singapore based Venture Capital fund that invest and help startups to build tech and grow in Asia. It invests in seed and early stage capital and has already made investments in countries like US, Australia, Singapore, Malaysia, Philippines, India etc.

  • Office: Singapore
  • Sector Focus: E-Commerce, FinTech, Marketplace, Media and Entertainment, SaaS, Software
  • Ticket Size: Early Stage- USD 5- 15 Million 
  • Website: https://www.jungle-ventures.com/

3. Accel Partners:

Founded in 1983, Accel Partners is another American Venture Capital Fund. It funds startups by the way of seed capital, early stage and growth stage investments.

  • India Office: Bengaluru
  • Sector Focus: Internet and Consumer Services, Infrastructure, Cloud -Enabled Services, Mobile and Software
  • Ticket Size: USD 0.5- 50 Million 
  • Website: https://www.accel.com/

4. Nexus Venture Partners:

Founded in 2006 and headquartered in California, United Stated, Nexus Venture Partners technology and consumer focused venture fund largely investing in early stage and growth stage companies.  

  • India Office: Bengaluru
  • Sector Focus: Mobile, Data Security, Big Data analytics, Infrastructure, Cloud, Storage, Internet, Rural Sector, Outsourced Services, Agribusiness, Energy, Media, Consumer and Business services, Technology
  • Ticket Size: USD 0.5- 10 Million 
  • Website: https://nexusvp.com/

5. Helion Venture Partner:

Founded in 2006, Helion Venture Partners is an India focused tech fund investing in technology and consumer startups. It invests in seed, early stage, late stage and growth companies. Till now, it has investment over USD 600 million capital and has made over 25 exists out of the total investments.

  • India Office: Bengaluru
  • Sector Focus: Technology and technology-powered businesses such as e-Commerce, Online services, Mobility, Enterprise Software and Outsourcing
  • Ticket Size: USD 2- 10 Million 
  • Website: http://www.helionvc.com/

6. Chiratae Ventures:

Founded in 2006, Chiratae Ventures was earlier knows as IDG Ventures. It is an India focused technology led venture fund. It has invested in over 80 companies with a total investment of over USD 700 Million. It has also made a successful exit from 20+ companies till date.

  • India Office: Bengaluru, Delhi (Aerocity)
  • Sector Focus: Consumer, Software, Fin-tech, Health-tech 
  • Ticket Size: USD 1- 10 Million 
  • Website: https://www.chiratae.com/

7. Saif Partners:

Founded in 2001, Saif Partners is one of the leading Venture Capital and growth funds of India. It is headquartered in both China (Hong Kong) and India (Bengaluru). It has funded over 100 companies and currently managing over USD 4 billion amount worth of assets. 

  • India Office: Bengaluru
  • Sector Focus: Consumer, education, Enterprise Tech, Finance, Healthcare, Industries, It sector and Logistics 
  • Ticket Size: Flexible ticket size 
  • Website: http://www.saifpartners.com/

8. Kalaari Capital:

Founded in 2011, Kaalari Capital is a India’s leading venture capital fund investing in technology related companies. They have invested a total amount of around USD 160 million in various technology oriented companies. 

  • India Office: Bengaluru
  • Sector Focus: Consumer Tech, Enterprise tech. Health Tech, Fin Tech, Supply Chain & Logistics  
  • Ticket Size: USD 1- 5 Million 
  • Website: https://www.kalaari.com/

9. Ivy Cap Ventures:

Founded in 2011, Ivy Cap Ventures follows a unique entrepreneur’s centric investment approach wherein they focus on funding highly professional entrepreneurs. Ivy Cap Ventures focuses to invest in early stage and growth stage companies.

10. Lightspeed Venture Partners:

Founded in 2000, Lightspeed Venture Partners is an American Venture capital fund focusing on early stage investments in Enterprise Tech and Consumer Tech Space

  • India Office: Bengaluru, Delhi (Aerocity)
  • Sector Focus: Enterprise Software, Software, Mobile
  • Ticket Size: USD 1- 25 Million 
  • Website: https://lsvp.com/

11. Matrix Partners:

Founded in 1977, Matrix Partners is a California, US headquartered Venture Capital Fund. It invests in seed and early stage companies in US as well as India. It has invested over USD 4 Billion in over 100 companies till date and successfully made several exits.

  • India Office: Bengaluru 
  • Sector Focus: Internet, Consumer internet, E-commerce, Travel, Internet, Consumer Internet, E-commerce, Travel
  • Ticket Size: USD 0.15- 10 Million 
  • Website: https://www.matrixpartners.com/

12. Bessemer Venture Partners:

Founded in 1911, Bessemer Venture Partners is a San Francisco based Venture Capital fund. It manages more than USD 4 billion of assets under management in over 130 companies around the world. It has successfully taken 125 exits till date.

  • India Office: Bengaluru
  • Sector Focus: Cyber Security, Financial Services, Mobile, Cleantech Cloud Computing
  • Ticket Size: USD 0.1- 66 Million 
  • Website: https://www.bvp.com/india
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Due to high number of applications for Investment Banking Jobs, Employers have become stringent in their hiring policies and only a few candidates get shortlisted.

To GET the right job, it is required to first FIND/ SEARCH the right job and this is one of the biggest challenges as the majority of the jobs are filled internally or through references. Hence, it becomes extremely difficult for the candidates to make the first impression in the eyes of the employer. 

As a prerequisite, you should obviously have Financial Modeling as a basic skill on your resume otherwise it’s pretty hard to get a job in Investment Banking.

I will be listing ways to search and apply for a job in the Investment Banking Industry effectively. All the points should be taken into consideration to land your dream job and to get the right salary in your pocket.

Keep a Track of Companies –

Whenever the companies post for any vacancy on public domain, it gives an indication that they are looking to hire somebody on an urgent basis. And, in that case those who have applied firstly, get an advantage in the hiring process. 

As soon as companies get the right candidate, they tend to close the process and fill the job vacancy. 

Hence, it is extremely important for candidates to track the companies and not give any chance to the employer of being missed out. It is required to apply immediately on the hiring websites (Linkedin, Iimjobs etc.) without delay. 

Candidates are required to keep in mind the following points for keeping a track on the companies. These are some very obvious guidelines:

  1. Make an account on the hiring websites like Linkedin, Iimjobs, Naukri etc.  [Very Obvious]
  2. Keep your accounts ready with full background information, contact details, resume and other disclosures which will help you in applying for the companies faster.
  3. Keep a list of companies ready who are working in the Investment Banking domain and follow them on Linkedin.

For the list of Investment Banking companies, please refer to the Blog – List of Investment Banking Companies in India

  1. Keep a check on these portals daily & apply as and when you find the opportunity worthy.
  2. Try to reach out to the HR department of the company immediately via Linkedin or via the company’s website and send an email to the HR separately. This will make your profile reachable to the right personnel at the right time.

Build Connections for getting referrals –

Key to get into Investment Banking is to make connections and try to apply for the job even before others get to apply. It is a harsh reality of the Industry but people who tend to have great connections easily find jobs in the domain as compared to those who have fewer connections.

References help you reach to the employer more effectively and faster than others could reach. References are not easy to make and it requires time and experience to build strong connections. 

However, you can start making connections from the industry even before landing a job by following the below mentioned points:

  1. Build Linkedin Contacts through tracking the targeted companies and finding the right hiring personnel in the company.
  2. You can attend Analyst/ Associate programs of the Big Bulge Bracket companies (Goldman Sachs, JP Morgan, Morgan Stanley, Credit Suisse etc.). Employees give priority to candidates in the hiring process who attended these programs. Google them out!
  3. Keep posting about your relevant certifications to attract the employer’s attention and justify your interest in Investment Banking. I have covered this point in Detail  (With Examples) in my MS Excel For Finance Course.

Resume Building

You should highlight the following points clearly. They are very obvious though, still I would mention them –

  1. Career Objective
  2. Educational Background
  3. Professional Degree/ Certifications
  4. Professional Experience
  5. Excel, Financial Modelling and Valuation proficiency
  6. Other Skills and traits
  7. Professional projects delivered in the past etc.

The last 3 points are very critical and makes the profile more appealing to any employer. All the points should be mentioned in detail in the resume. 

And, it is advisable to always share a cover letter or write a mail body highlighting the summary of the points mentioned above (Point 1 to 7).

Database Preparation and constant follow ups:

Candidates tend to fail in getting the right job as they think that after applying for any job, their task is almost done. However, their task for application is still not done till the time they get any revert from the company whether in the form of a YES or a NO. It’s completely fine to even hear a NO as revert because then you can go back and ponder about your shortfalls.

WHAT IF you don’t get a revert? For the same, you are required to keep a database of each and every company and follow up with them on a regular basis. The database can be prepared on excel sheet and you’re required to keep the following points in mind:

  1. Keep a list of each and every company you have applied so far with the date of application, name of concerned person and the mode of application. (Linkedin, Company website, email etc.)
  2. Keep a column of follow up and try to follow up after every 10 days (Maximum 2 times).
  3. Try to apply for the same profile through various modes rather than sticking to just one mode
  4. If you’ve received a revert from an HR and they haven’t shortlisted you for this round, then revert while asking for feedback and show your dedication that you will improve yourselves and will be appearing for the same profile next time. This makes a strong connection with the company’s personnel.
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Private Equity is an essential part in understanding the concepts of Finance. There are two types of sources available for any company to raise money; one if equity and the other is debt. Wherein, Equity is further divided into two (2) parts; Public Equity and Private Equity.

When a company issues shares through IPO or through any public market, then the equity raised is termed as a Public Equity. However, when it is raised through Private sources or through institutions in a private company, then it is called Private Equity.

There are various Private Equity Funds that are available across the globe and constantly look for opportunities in private space for funding. Typically Private Equity Investors earn more returns through investing in private companies as they invest in growth companies and not the already matured ones. Their investment tenure varies as per the fund strategy and majority of the private equity players take exit either through IPO or strategic sales.

Like Investment Banking companies, Private Equity Companies or Private Equity fund houses are located in tier- 1 cities only (major hub in Mumbai). If you’re looking to join a Private Equity Company as well, then you are required to shift to tier 1 cities only.

List of Top Private Equity Companies in India

(I) International Players having presence in India

1. The Carlyle Group

Founded in 1987, it is one of World’s largest private equity companies. It has made a successful investment of around USD 200+ billion across the globe. It focuses on sectors including Consumer, Healthcare, Manufacturing etc. but not Real Estate.

Headquarters: Washington, DC, United States

India Office: Mumbai

Ticket Size: USD 50+ million

Website: https://www.carlyle.com/

2. Warbug Pincus

Founded in 1966, Warbug Pincus is a New York based private equity firm focuses on growth investments. It has invested in over 780 companies spread across 40 countries. It has more than USD 60+ billion assets under management.

Headquarters: New York, United States

India Office: Mumbai

Ticket Size: USD 50+ million

Website: https://www.warburgpincus.com/

3. Bain Capital

Founded in 1984, Bain Capital is one of the leading private multi asset investment firm employing more than 1,000 employees. It is a sector Agnostic company which invests in all the sectors and has no specific sector preference.

Headquarters: Boston, Massachusetts

India Office: Mumbai

Ticket Size: USD 40+ million

Website: https://www.baincapital.com/

4. TPG Growth Capital

Founded in 1992, TPG Capital is a private equity investment firm focused on leveraged buyout and growth capital. TPG Growth Capital has over USD 70 billion of assets under management. TPG growth’s main focus area is distressed assets.

Headquarters: San Francisco, United States

India Office: Mumbai

Ticket Size: USD 50+ million

Website: https://www.tpg.com/

 5. CVC Capital Partners

Founded in 1981, CVC Capital Partners is a private equity and assets management firm having presence in Europe and Asia through over 24 offices. It has total assets under management of around USD 75 billion.

Headquarters: Luxembourg

India Office: Mumbai

Ticket Size: USD 50+ million

Website: https://www.cvc.com/

6. The Blackstone Group

Founded in 1985, Blackstone Group is a private equity, assets management and financial services focused firm and it has a total of around USD 35+ billion assets under management.  

Headquarters: New York, United States

India Office: Mumbai

Ticket Size: USD 20+ million

Website: https://www.blackstone.com/

7. KKR & Company

Founded in 1976, KKR & Co. is a global asset management firm including private equity, real estate, infrastructure etc. It has a total of around USD 40+ billion assets under management.

Headquarters: New York, United States

India Office: Mumbai

Ticket Size: USD 20 million – 75 million

Website: https://www.kkr.com/

8. Everstone Capital

Founded in 2006, Everstone Capital is a private equity and real estate investment firm having presence India and South East Asia. It has a total of around USD 4 billion assets under management.

Headquarters: Singapore

India Office: Mumbai

Ticket Size: USD 15+ million

Website: https://www.everstonecapital.com/

9. Baring Private Equity

Founded in 1997, Baring Private Equity is one of the leading private equity and investment management firms of Asia having a total of over USD 20 billion assets under management.

Headquarters: Beijing

India Office: Mumbai, Delhi

Ticket Size: USD 20 million – 75 million

Website: https://www.bpeasia.com/

10. CLSA Capital Partners

Founded in 1986, CLSA is a Pan Asian private equity firm having offices in around 20 cities. CLSA is managing a total of USD 5 billion assets across multiple sectors.

Headquarters: Hong Kong/ Singapore

India Office: Mumbai

Ticket Size: USD 10+ million

Website: http://www.clsacapital.com/

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(II) Domestic Players started operations in India

1. Kotak Private Equity

Founded in 1997, Kotak Investment Advisors Limited is a part of Kotak Mahindra group. Their investment strategy is to fund future leaders. Kotak Investment Advisors is into various businesses other than the Private Equity like real estate, infrastructure etc.

Location: Mumbai

Sector Focus: Consumer, Real Estate, Infra, Healthcare, Financial Services

Ticket Size: USD 10+ million

Website: https://alternateassets.kotak.com/kotak-private-equity-fund.php

2. Chrys Capital

Founded in 1999, Chrys Capital is one of the leading investment firms managing a total of over USD 4+ billion assets through its 8 funds. It has launched its 8th private equity fund in Jan’2019 for around USD 850 million.

Location: New Delhi

Sector Focus: Consumer, Healthcare, IT, IT services, Financial Services

Ticket Size: USD 30+ million

Website: http://www.chryscapital.com/

3. True North’s India Value Fund

Founded in 2000, True North is India’s 1st private equity fund which raised money from domestic market. True North launched India value fund with a combined investment size of around USD 2 million and focusing towards mid marked sized and profitable companies.

Location: Mumbai

Sector Focus: Financial Services, Consumer, Healthcare, IT

Ticket Size: USD 10+ million

Website: https://truenorth.co.in/aboutus.html

4. Motilal Oswal Private Equity

Founded in 2006, MOPE Advisors Private Limited is an asset management division of Motilal Oswal group.  The focus of the company is to invest in mid-market space.

Location: Mumbai

Sector Focus: Consumer, Financial Services, Real Estate

Ticket Size: USD 10 million – 50 million

Website: https://motilaloswalpe.com/

5. IDFC Private Equity Fund

Founded in 2002, IDFC Private Equity (now Investcorp) is a leading private equity firm providing investment services in all the sectors. It has a separate sector focused towards infrastructure services which has a ticket size of over USD 50 million.

Location: Mumbai

Sector Focus: Consumer, Agri, Financial Services, Infrastructure- Social, Rural (agri related)

Ticket Size: USD 5 million – 40 million

Website: http://www.idfc.com/alternatives/private-equity/our-mandate.htm

6. ICICI Venture Fund

Founded in 2002, ICICI Venture fund is one of the oldest private equity funds of India with currently manages a total of over USD 4 billion assets across major 4 business verticals; Private Equity, Real Estate, Infrastructure and Special Situations. It has launched a total of 4 India advantage funds till date.

Location: Mumbai

Sector Focus: Private Equity, Real Estate, Infrastructure, Special Situations

Ticket Size: USD 5 million – 20 million

Website: http://www.iciciventure.com/

7. CX Partners

Founded in 2008, CX Partners is one of the leading Private Equity fund focusing on mid-market. Their investment strategy is to focus on product/ service and the budding entrepreneurs.

Location: New Delhi

Sector Focus: Financial Services, Consumer, Healthcare, IT

Ticket Size: USD 20+ million

Website: https://cxpartners.in/

8. Premji Invest

Founded in 2016, Premji Invest is one of the fastest growing private equity companies of India and it has funded over 40 public and private companies till date.

Location: Bangalore

Sector Focus: Sector Agnostic

Ticket Size: USD 50+ million

Website (Linkedin): https://www.linkedin.com/company/premji-invest

9. Kedaara Capital

Founded in 2011, Kedaara Capital is an operations-based Private Equity Fund formed in partnership with CD&R. Kedaara Investment strategy is to invest companies having market leadership and sound management.

Location: New Delhi, Mumbai

Sector Focus: Financial Services, Consumer, Healthcare, IT

Ticket Size: USD 20+ million

Website: http://www.kedaara.com/firm-profile.html

10. JM Financial Private Equity

Founded in 1973, JM Financial group is a very well-known financial services group of India. It has business in Investment Banking, Brokerage, Assets Management and Private Equity. It recently launched a Fund II for growth Capital

Location: Mumbai

Sector Focus: Sector Agnostic

Ticket Size: USD 5+ million

Website: https://jmfpe.com/Home

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Most of you might be having queries relating to the work done by an Investment Banker and why this profile is considered to be a high analytical profile which brings back to the same question of the tasks performed by an Investment Banker.

Due to the high standards of profile, there are a number of skills which are required to become a successful Investment Banker which are mentioned in my previous blog (link provided below)

A Sneak peek into daily life of an investment Banker

Typically an Investment Bankers works for more than 80 hours a week and they spend a lot of time working on Power-point and Excel. Investment Bankers’ work varies as per their job profile which is typically divided into Front Office and Back Office. Their work and salary varies as per the profile.

Furthermore, the positions are divided as Analysts, Associates, Vice Presidents and Partners. Typically Vice Presidents and Partners perform the front end part and Analysts and Associates do majorly the Back end work.


Tasks Performed by an Investment Banker

(I) Front End Office Tasks

Front office tasks are typically performed by the senior management of an Investment Banking company and it includes all the precision and qualitative work relating to handling and managing relations with clients and investors.

1. Client/ Investor’s Interaction:

One of the major tasks performed by the Investment Bankers is to interact and engage with clients who are the main sources of revenue. In order to out light on the client Interaction part, one has to understand the overall objective of Investment Banking, which is to provide a smooth path to the companies in their fund raising/ M&A process.

As fund raising and M&A requires a lot of work, analysis and investor’s interaction, clients always look for experienced professionals who have the right knowledge in the space. Hence, it is imperative for the Investment Bankers to use the right skills and build the right confidence in client so that the client will be able to engage with them.

In some cases, the client can be even fund who is taking to raise funds from FoFs (Fund of Funds). Investment Bankers are also required to engage with the investors and they pitch the company to the investors on behalf on their clients.

2. Strategy Formulation/ Management Consultancy:

Another important role of being a Front End Investment Banker is to strategize and advice management on their business’s operations, finance and other divisions.

Management Consultancy at times becomes important as most of the companies are not investment ready since beginning; hence, it is the work of an Investment Banker to help company for taking corrective steps in order to make them capable for raising funds.

The advice can be relating to various company management decisions including entering into new markets or new geographies, cutting expenses or jobs, venturing in a different line of business, growth through organic or inorganic means etc.

3. Closing Engagement Terms (EL) and signing an Mandate:

Mandate is an engagement Letter signed between the Client and the Investment Banker and lists the objective of the agreement, limitations of the work performed and the commercials part.

Investment Bankers need to follow a rigorous process for closing the mandate and the process includes meeting the clients several times and pitching about themselves to sign the mandate with them and not their competitors.

4. Traveling and attending live conferences:

Another role but not major role of an Investment Banker is to travel and meet clients across the Country/ Globe. For them to be able to find new clients, it is important to attend live entrepreneurship & startups conferences and meet the clients on regular basis.

Front end role is considered to be a 75% traveling role which requires them to meet clients and these conferences solve the purpose of an introductory meeting.

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(II) Back End Office Tasks

Back end office work is performed by the Analysts and Associates and it includes majorly working on Power point, Excel and Databases of 3rd parties.

1. Collaterals Building:

One of the key important tasks of a Back end office Investment Banker is to build collaterals of any company which serves as the main documents which are listing/ incorporating all the information of a client. These collaterals are built for the purpose of sharing with the investors and based on the information mentioned in the collaterals, investors take a judgment.

There are predominantly three types of collaterals which are built by any Investment Banker and they are as follows:

  • (a) Teaser:
    Teaser is a one (1) to two (2) slider document built on a power point, which gives brief information on any company. Usually the teaser is prepared to circulate with infinite number of investors and investors decide on the company based on the preliminary information shared.
    Teaser is majorly prepared on a no name basis (it doesn’t mention the name of the company but the business and other details). Once investors get an interest in the company, they ask for further details and this is time when an Information Memorandum (IM) is shared with them.

  • (b) Information Memorandum:
    IM is a detailed document again built on a power point presentation of around 50+ slides (Length of the slides varies as per companies). It mentions all the important information of a company including Business Model, Product or Service details, Marketing & Distribution Strategies, Management profile, operational & financial metrics etc.

  • (c) Financial Model:
    Financial Model is a document prepared on excel which incorporates financial information of a company including its past performance and future projections.
    The model highlights all the three projected financial statement (Statement of Profit & Loss, Balance Sheet & Cash Flow Statement) in detail with the assumptions and management’s growth plans.

2. Conducting Research:

The other main key work of an Investment Banker is to conduct Industry research and competitor’s research using various databases platforms including; Bloomberg, Capital IQ, Factset, Thomas Reuters etc.

Analysts and Interns spend a lot of time in extracting information through these databases and find conduct multiple analysis on database extracted. For any client, Investment Bankers are required to do Industry and competitors study in detail.

3. Performing Valuations:

Another task of an Investment Banker is to do valuations on behalf of their clients. In most of the big IB firms, they tend to have a separate division dedicated towards performing valuations of their client and this division serves as an integral division of the firm.

Valuation is typically divided into two parts; Relative Valuation and Absolute Valuation. Investment Bankers also use databases support while performing Relative Valuation (Relative Valuation required studying the valuation of the competitors through their trading multiples and past transaction multiples).

4. Doing Data Analysis:

 Another work is to analyze the data captured by the company and to find out key metrics from the pool of data provided. Companies give a bunch of data to the Investment Bankers which is usually captured on day to day basis in MIS, CRM tools.

It is Analyst’s or Intern’s job to analyze and find out key results from the same which will be highlighted in the IM for showing better understanding of the company.

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People have a misconception that Financial Modelling is a very difficult task and it takes a lot of effort to build one. Financial Modelling is often regarded as one of the most difficult exercises in the industry and some people find it nearly impossible to build one financial model.

Here, in this article, I will give you some useful tips which will make your model building exercise much easier. These are some of the easy steps to be adopted while working on a model that will make the exercise more fun. These tips will make any model look professional and will majorly avoid any chances of hassle being faced by the analysts and the investors/ evaluators.

1. Understanding of the Industry and Competitors

Some start working on the model directly post the company’s evaluation without even reading about the Industry. However, it is equally important to get a sense of the industry and doing a competitive company’s analysis in order to make the projections.

One should keep in mind that the projections should not be majorly off from the Industry standards and competitors unless there’s a specific reason to justify the same deviation.

It is always considered a good exercise to gather knowledge of other companies’ financials and ratios before projecting the target. This makes the model more reliable and in line with the Industry.

2. Colour Coding

Make different colour codes for the following to make it easily understandable by the model evaluator:

  1. Audited Numbers
  2. Assumptions
  3. Ratios
  4. Forecasting

These colour codes can be in the form of cell background colour, font colour, font size, font type etc. There are two major benefits for colour coding:

  1. It makes a model look professional
  2. One can easily distinguish the numbers in the abovementioned heads 

3. Make a separate tab for Assumptions

It is required to make a separate tab of assumptions in your model and you’re required to keep it separate from all the numbers. The assumption is the most critical part of the model and it serves as a foundation for the projections taken. Hence, investors want to specifically take a look at the assumptions taken.

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4. Discussion with the Management

It is extremely important to get the assumptions validated by the management once. As management is running the business and they understand about the company better than anyone. Analysts can write the numbers on excel but it is in management’s hands to make those numbers real.

Analysts should properly discuss these numbers with management and take their observations into consideration. And, the model should be discussed with the majority of people in the management.

5. Make notes for any business point/ observation

A model can be built on various numbers and various scenarios, it is important to list all the observations and critical points in notes for an investor to understand the assumptions taken. Notes justify the answer for taking x assumption instead of y.

For Example; if a company has decided to source their raw materials from a different vendor which is offering them materials at a lower price. It will reduce the raw materials costing taken in Statement of Profit & Loss by some percentages. Mentioning the same reason in notes will give investor/ evaluator an understanding as to why the reduction in raw material prices is built in the model.

6. Break complicated formulas into pieces

Incorporating complicated formulas in a model makes it difficult for others to understand. To make a model more understandable, you are required to split all the complicated formulas or all the complicated steps into various formulas and steps respectively.

Breaking of steps will be slightly longer than the previous complicated method but it will be easy to operate while you will be working on the model along with making it simpler for others.

It there is any complicated formula used in the model, then it is important to provide its simple breakup in notes with proper examples.

7. Make “Index”, “Summary” and “Charts & Graphs” Tab

The model consists of several tabs and it takes hours to go through each and every model item in detail. Hence, analysts are advised to make a summary and charts tab separately for all the important numbers including Revenue, Gross Profit, EBITDA etc.

It gives a summary of the important values forecasted in the model and one does not have to go through the whole model to understand the business in brief. They can simply take a look at these two tabs in detail.

You can also insert hyperlinks on the index sheet for one to directly reach to the required tab by just clicking on the hyperlink. Also, hide some of the extra working files in your model for clean-up.

8. Audit the Model

Once you complete the model, get it auditing by a couple of people to remove all the unexpected errors. There are two ways of auditing:

  1. Do audit yourself- By checking each and every formula inserted and the assumptions are taken.
  2. Share with others for audit- It is important to get the model audited by at least 2 people because every other individual will come up with their own points and they will not miss something which you might have missed.
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Investment Banking companies typically are located in tier- 1 cities like Mumbai, Delhi, Bangalore and Hyderabad with major IB companies in Mumbai. As Mumbai is termed as a financial capital, thus, along with stock exchanges, insurance companies, brokerage firms, mutual funds, Mumbai also houses to investment banking companies on a large scale.

And, with the growth of tier- 1 cities in financial matters, investment banking companies are also shifting to places like Delhi NCR, Bangalore and Hyderabad.

If you’re looking to join an investment banking company then you are required to shift to these locations as cities like Mumbai, Bangalore, Delhi NCR, Hyderabad etc. are a hub of the financial services industry.

International Investment Banks having presence in India

Goldman Sachs

One of the top global investment banks which is well respected in its own field. It offers various services including investment banking, securities services, Global Markets, Research and wealth management.

JP Morgan Chase

It is a multinational bank offering services in various financial services domain. It is the largest bank ranked by S&P Global. It started its operations by offering commercial banking services and later expanded to other areas.

Citibank

Founded in 1812, it started as a banking division into consumer space. Citibank is into most of the financial services activities ranging from consumer banking services to HNIs services to Corporate Banking.

Morgan Stanley

It is a financial services Business conglomerate operating in various services including wealth management, research, investment management etc. across 36 countries. 

Bank of America Merrill Lynch

It is one of the largest banks of the world operating in similar services as to other largest banks. Now, its name has changed to Bofa securities. It is different from Merrill which is a wealth management division.

Credit Suisse

It is a global Investment bank and financial services company that is also engaged in services like private equity, asset management, research etc.

Deutsche Bank

Deutsche Bank is a global investment bank with its major Business into Investment Banking division. It is present across in more than 60 countries. It is into private banking, Business banking, insurance and wealth management services as well.

UBS

It is a global financial services company operating in more than 50 countries. It largely operates in four interdependent divisions- Global Wealth Management, Personal & Corporate Banking, Asset Management and Investment Banking.

Barclays Bank

Started by James Barclay, Barclays is a British originated multinational Bank currently operating across the globe. It is into services like private banking, personal banking, corporate banking and investment banking.

BNP Paribus

It is a bank based out of Paris and currently is one of the largest (8th) banks of the world. It has presence in over 70+ countries. It helps various corporates and its clients in Investment Banking solutions.

HSBC

HSBC, Hong Kong and Shanghai Banking Corporation, is another one of the largest banks of the world (7th largest) spread across more than 65+ countries through 4,000 offices. HSBC first originated in Hong Kong and then later shifted to London.  It is into various Businesses including commercial banking, investment banking, private banking etc.

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Leading Investment Banks of India

Avendus Capital 

Avendus Capital is one of the largest Indian originated Investment Banks that offers various financial services including M&A, Due Dilligence, Private Equity, Investment Banking, private placement, restructuring, recapitalization, turnaround, and valuation advisory services.

  • Established Year: 1999
  • Type: Boutique Investment Banking Firm
  • Business: M&A, Due Dilligence, Private Equity, Investment Banking
  • Headquarters: Mumbai
  • Careers Link: https://www.avendus.com/india/careers

Axis Capital Limited

Axis Capital Limited, which was earlier called as Enam Securities Private Limited and a part of Axis Bank, is one of the leading Investment Banks engaged in boutique and mid-market investment banking services. It is currently into various services including Equity Capital Markets, M&A, Structured Finance, Private Equity and Investment Banking.

  • Established Year: 2005
  • Type: Wholly owned subsidiary of Axis Bank
  • Business: Equity Capital Markets, M&A, Structured Finance, Private Equity, Investment Banking
  • Headquarters: Mumbai
  • Careers Link: https://www.axiscapital.co.in/careers

Edelweiss Financial Services Limited

Edelweiss Financial Services Limited is a part of Edelweiss group which was co- founded by Rashesh Shah in 1995. The group is into various services including Credit facilities, Investment & Advisory, Insurance, Wealth Management, Asset Management, Corporate Advisory etc. and it is operating various divisions through different subsidiaries. The competitors of Edelweiss are Centrum India and SMC Finance.

  • Established Year: 1995
  • Type: Part of conglomerate Edelweiss group
  • Business: Credit, Investment & Advisory, Insurance, Wealth Management, Asset Management, Corporate Advisory
  • Headquarters: Mumbai
  • Careers Link: https://www.edelweissfin.com/edelweisscareers

JM Financial Institutions Securities

JM Financial Services is a complete solution provider of all the financial services from Investment Banking to Wealth & Asset Management to Mortgage Lending & Distressed Credit to brokerage services. It is well known company for Private Equity Services as well and currently operates in midmarket business.

  • Established Year: 1998
  • Type: Financial Services group
  • Business: Investment Banking, Wealth Management, Mortgage Lending, Distressed Credit, Asset Management
  • Headquarters: Mumbai
  • Careers Link: https://www.jmfl.com/Careers

ICICI Securities Limited

ICICI Securities is a technology-based firm present across 77 cities of India and providing all the integrated services to its clients which includes Investment Banking, Institutional Broking, Retail Broking, Private Wealth Management, and Financial Product Distribution.

  • Established Year: 1995
  • Type: Technology-based firm and a part of ICICI Bank
  • Business: Investment Banking, Institutional Broking, Retail Broking, Private Wealth Management, and Financial Product Distribution
  • Headquarters: Mumbai
  • Careers Link: https://www.isecpwm.com/careers.html

IDBI Capital

IDBI Capital, a wholly-owned subsidiary of IDBI Bank, is a leading financial services company providing a complete package of services including Capital Markets, Investment Banking, Institutional Broking & Distribution, Retail Broking & Distribution, Fund Management, Private Wealth Management, and Research.

  • Established Year: 1993
  • Type: Wholly owned subsidiary of IDBI Bank
  • Business: Capital Markets, Investment Banking, Institutional Broking & Distribution, Retail Broking & Distribution, Fund Management, Private Wealth Management, and Research
  • Headquarters: Mumbai
  • Careers Link: https://idbicapital.com/careers.asp

O3 Capital Global Advisory Services

O3 Capital, edge to edge competitor of Avendus Capital, is a mid-market Investment Banking Company involved in the business which includes Corporate Finance, Investment Banking, and Alternate Asset Management. O3 capital has hired experienced professionals into the company and has opened offices in countries other than India as well.

  • Established Year: 1993
  • Type: Mid-Market Investment Bank
  • Business: Corporate Finance, Investment Banking, and Alternate Asset Management
  • Headquarters: Mumbai
  • Careers Email: careers@o3capital.com

Veda Corporate Advisors

Veda Corporate Advisors is a Chennai based boutique and mid-market Investment Bank. It is one of the largest Investment Banks of Chennai. And like other IBs, it also employs people with high professional acumen and serves clients in services like Mergers & Acquisitions, Structure Debt Finance and Private Equity.

  • Established Year: 2003
  • Type: Boutique Investment Banking Firm
  • Business: Mergers & Acquisitions, Structure Debt Finance, Private Equity
  • Headquarters: Chennai, Bengaluru
  • Careers Link: https://vedacorp.com/careers/

Spark Capital

Spark Capital is one of the leading mid-market Investment Banks of India which is located in Bengaluru. It is engaged in services including Investment Banking, Institutional Equities, Fixed Income Advisory and Wealth Advisory and it is very active in deals closures. Spark Capital always managed to maintain themselves to be on the league table.

  • Established Year: 2001
  • Type: Mid-Market Investment Banking Firm
  • Business: Investment Banking, Institutional Equities, Fixed Income Advisory and Wealth Advisory
  • Headquarters: Bengaluru
  • Careers Link: http://sparkcapital.in/careers/

Unitus Capital

Unitus Capital, founded in 2008, is India’s first established Impact based Investment Banking Company. It is engaged in services including Structure Debt Finance, Private Equity and Corporate Advisory for companies that are creating impact in the lives of the individual. For Example, Environment related companies, Food & Agriculture, Micro Financing, Fin-tech etc.

  • Established Year: 2008
  • Type: Impact based Investment Banking Firm
  • Business: Structure Debt Finance, Private Equity, Corporate Advisory
  • Headquarters: Bengaluru
  • Careers Email: info@unituscapital.com

MAPE Capital Advisors

MAPE is a leading Investment Bank of India engaged primarily into M & A and Private Equity. It also provides other services including Corporate Advisory, Debt, Real Estate Financing etc. MAPE is ranked as top 10 Investment Banks of India on the basis of their number of transactions.

  • Established Year: 2001
  • Type: Mid- Market Investment Banking Firm
  • Business: Mergers & Acquisitions, Private Equity, Corporate Advisory, Debt, Real Estate Financing
  • Headquarters: Bengaluru
  • Careers Link: http://www.mapegroup.com/careers.html
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For securing an Investment Banking job at a good package, it is extremely important to crack the interview in an excellent manner and leave an extraordinary impression on the interviewer. Interview consists of case study or an assignment round and personal face to face discussion round.

And unlike other finance interviews, Investment Banking Interviews are more in depth and candidates find it difficult to crack the interview questions because of the following reasons:

  • Diversity of questions asked (Questions are asked from varied topics, basically from anywhere and everywhere from finance concept)
  • Intensity of the questions asked (One topic can be questioned in a detailed manner)

Here, in this article, I have created a list of questions which interviewers usually ask while hiring for an entry level profile of Investment Banking. There are multiple skills on which the interviewers test an individual and I will be covering majority of those skills in this article.

Major Questions asked in an interview of Investment Banking Job Profile

 1. Personal/ background Questions:

Primarily, any interview in Investment Banking starts with questions related to personal/ personal background questions in order to gauge the basic understanding of the candidate. These questions are asked to judge the attitude and personality of an individual towards life and his/ her career. This serves as a first step in the interview and defines the whole direction, structure and timing of an interview

These questions include:

  1. Brief on your education and experience?
  2. What are your strengths and weaknesses?
  3. What is your family background?
  4. What is unique about you?
  5. What do we consider you for this job?
  6. What are your best skills?
  7. Do you prefer to work independently or as a team?
  8. Rate yourself in the following skills – Excel Skills, Powerpoint Skills, PPT Skills, Team Building Skills, Analytical Skills, Communication Skills, Interpersonal Skills, Stress handling skills etc.

2. Career related Questions:

Another stream of questions which interviewers ask in Investment Banking interview is related to career and life goals. It determines the willingness of a candidate for the job and determination towards the field.

These questions include:

  1. What are your career goals? How do you see yourself after a span of 5 years or 10 years?
  2. Why are you choosing finance as a career option?
  3. Why are you looking to enter into Investment Banking Industry?
  4. Where do you see yourself in Investment Banking in future; whether in front end or back end? And, why?
  5. How this job/ profile will help you in achieving your career goals?
  6. Are you planning to pursue any further study, MBA, CFA etc. for your growth?
  7. How will you cope up with your studies and your job in future?
  8. Till how long, you are planning to stay with our company?

3. Finance related Questions:

This is the major part of the overall interview process and interviewer usually asks questions from any topic related to finance which may vary from ratios to cash flows and from company’s financial statement analysis to finance statements’ preparation.

These questions include:

  1. What is the structure of Statement of Profit & Loss, Balance Sheet and Cash Flows Statement?
  2. What do you mean by liquidity ratios, solvency ratios, profitability ratios?
  3. What is debt equity ratio, ROE, ROCE, ROA, Net Margin, EBITDA Margin, Assets Turnover, financial leverage etc.?
  4. What is Dupont Analysis, how is it helpful in determining ROE?
  5. What is the difference between net profit, cash flow from operating activities and cash profit?
  6. What all numbers will you consider while looking at a financial position of a company?
  7. As an equity investor, which are the most important ratios that you will calculate before making investment decisions?
  8. What is working capital and how will you calculate working capital days?
  9. What are the ways to projects revenue of a company?
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4. Financial Modelling and Valuation related Questions:

Investment Bankers spend hundreds of hours on building financial models and conducting valuations of multiple businesses. Thus, Interviewers expect candidates to have some knowledge of financial models and valuations which they test either from an assignment or from direct interview questions.

Generally the questions include:

  1. How will you forecast revenue/ turnover of a company?
  2. What is the process of making financial models?
  3. What are the different types of financial models prepared by the Investment Bankers?
  4. Draw a projected Profit & Loss account of a company based on its past numbers.
  5. Explain the valuation techniques in detail.
  6. What is the difference between relative and absolute valuation?
  7. How do you compute valuations through trading and transaction comparable?
  8. Explain a rough DCF Valuation Model.
  9. How do you compute discounted cash flows?
  10. What are free cash flows?
  11. What is difference between cash flows at the end of the year and free cash flows?
  12. What is difference between FCFF and FCFE?
  13. What is the formula of FCFF and FCFE?
  14. Explain CAPM model in detail.
  15. What is WACC and why do you compute it?
  16. What will be the impact on WACC if there is high debt in the company?
  17. What do you mean by Beta? And, how do you calculate Beta?
  18. What is the difference between levered and unlevered Beta?
  19. What is terminal value?
  20. How will you compute growth rate (g) while calculating terminal value in cash flows?

5. Accounting related questions:

Investment Banking has its roots lying in finance and knowledge of basic accounting is required for finance. This is the primary reason why CAs are increasingly getting hired in IB profiles. Accounting questions serve as a basic assessment topic for any finance profile and hence it is must for any interviewer to judge the candidate knowledge in accounts domain as well.

These questions include:

  1. What are the sub heads of Non-Current Liabilities, Current Liabilities, Non-Current Assets and Current Assets?
  2. Why deferred tax assets and deferred tax liabilities come in balance sheet?
  3. What are the ways of calculating depreciation?
  4. What is the difference between EBIT and Operating Profit?
  5. What are the two ways to show fixed assets value in Balance sheet?
  6. Where all does debt (in which head) comes in balance sheet?
  7. Which accounting standards do we follow in India?
  8. Does GST appear in accounting books? If yes, then where?
  9. When do you capitalize any expense rather than putting it in profit & loss as an expense?
  10. What is shareholder’s equity? What is the difference between convertible equity and shareholder’s equity?
  11. What is the difference between basic and fully diluted shareholding pattern?

6. Resume Questions:

Another key question type is to ask questions directly from the resume objecting certain points. This usually happens in HR interview and they are restricted to asking questions on resume and personality.

These questions might include:

  1. Can you walk me through your resume?
  2. Specific questions on your educational background; For example; if you have done CFA or CA then the interviewer will ask curriculum related questions of CFA or CA
  3. Specific questions on your interests and hobbies
  4. Specific questions on certifications/ courses

7. Other Questions:

These questions include:

  1. Personality/ psychometric questions
  2. Behavioral questions
  3. Questions on the Interviewer’s company/ organization
  4. Package and salary related questions
  5. Questions for interviewer

Note: The questionnaire list is totally inclusive and not exhaustive

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Investment Banking is one of the most trending term in the world of finance. Nowadays, many experienced professionals and graduates want to be an Investment Banker. It is one of the hardest, most lucrative and best paying jobs in the world. 

As more and more people are aspiring to be an Investment Banker and jobs are limited in this domain, recruiters are picky and choosy in hiring the best talent. It makes slightly tough for any fresher to enter into this high profile industry. 

Nonetheless, if you have analytical mind and you are very keen to make your career in Investment Banking then with the right education and right knowledge, you can successfully build your way in IB.

Education Criteria for entering into IB Industry 

1. MBA (Finance)

Investment Bankers prefer MBA Finance as top applicants’ profiles over other profiles. MBA Finance teaches students all the discipline as required in IB domain including finance, accounting, business acumen, marketing, financial analysis, management consulting and accounting knowledge.  Investment Banking is a mix of all the disciplines with majors in finance.

If a candidate is from top tier colleges (IIMs/ IITs, ISB, FMS, Xavier’s, IIFT etc.) then it becomes comparatively easier for them to enter into IB Industry.

2. CFA

If you’re a Chartered Financial Analyst (CFA) Charter, then you can easily make your way to IB industry. However, if you’re a CFA Level 3 candidate or CFA Level 2 candidate, then also you can enter into IB. CFAs are mostly preferred in industries like Investment Banking, Management Consulting, Hedge Funds, Mutual Funds, Brokerage firms, Insurance and Investment Firms etc.

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3. CA

Another preferred education requirement is of a Chartered Accountant (CA). CAs are shifting to Investment Banking Industry on a large scale because of its paying structure and its popularity among the CA students. Another segment which enthusiasts CAs is to get into Financial Due Diligence team of Investment Banking.

4. Graduation

The bare minimum education requirement is to get a graduate degree in any discipline. But graduation will only make you enter into IB at an entry level (Intern). You can enter to Analyst or Junior Analyst level if you have graduated from a renowned institute.

One can immediately become an Investment Banker post-graduation but you need to have good experience, knowledge and further qualification to sustain in it.

Things to improve to enter into IB Industry 

1. Analytical Skills:

You need to improve your Analytical Skills along with other skills (including but not limited to communication, presentation, excel, interpersonal etc.). Analytical skills play an integral role in IB Industry. 

Working on research and Financial Modelling requires a great analytical mind to adapt and learn these quickly.

2. Mathematical Skills:

This is one of the keys skills for entering or sustaining in IB Industry. If you’re unable to do basic math then IB is not the right industry for you. 

There are individuals who have thrived in this industry through excellent math’s knowledge. Investment Banking’s math is much more than making equations and solving it. 

3. Basic Finance Knowledge:

No Finance recruiter will hire you if you lack in basic finance knowledge i.e; knowledge of three basic statements (Profit & Loss Account, Balance Sheet and Cash Flow Statement), Analysis of the three Statements, Ratios, Securities, Present Values etc.

Finance knowledge is must to crack any interview for finance profile or related domains. An Investment Banker has to work on all the aspects of finance and it is expected from the candidates to be well versed with them.

4. Excel and PowerPoint Skills:

80% of the Investment Banking work constitute of working on Excel and PowerPoint presentations. You are required to be handy with the basic and advanced working of both the tools. 

You can take a video session or video course to learn working on Excel and PowerPoint which will make you job ready without making it a hindrance in your day to day work

5. Financial Modelling: (Plus Factor)

It is a plus for any recruiter if you have a sound knowledge in Financial Modelling. As Investment Bankers work day in and day out on models, they always haunt for people who can build models from scratch.

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Ways to get into Investment Banking

1. Approach to the right personnel

The best way to get your application heard in Investment Banking is to find the right personnel and approach to him directly. While writing a job application, it is required to highlight all the key points in the mail body or cover letter to attract the right eyeballs. 

Usually, you should directly reach out to either Associates or Vice Presidents as they are influential in hiring process in Investment Banking industry other than the HRs.

2. Secure an Internship in Investment Banking

If you already secure an Investment Banking Internship experience, then it becomes easier for you to secure a job in the same Industry. It is comparatively effective to get an Internship position over getting an Analyst position directly. 

3. Be a part of Analyst programs

Most of the big-bracket Investment Banks (Goldman Sachs, JP Morgan, Morgan Stanley, Credit Suisse etc.) conduct Analysts programs in their company for budding and aspiring candidates to join them as an Analyst. You can be a part of either of the programs and showcase your interest in IB to the employer in front. 

4. Build Connections

Building connections and networking is an important part of the job. Connections with the Investment Bankers or with the corporates can help you land a good profile job in Investment Banking.

5. Pursue an Investment Banking Course  

There are several institutes which help candidates in learning the core of investment Banking. They help candidates from scratch of learning the nuances of Investment Banking till the time of securing a high profile job in the same industry.

The WallStreet School is one of those institutes. It has designed a course specifically for budding students who are aspiring to enter into Investment Banking Industry. 

Usually people, who are new to the concept of financial models, have a misconception that there is only one type of financial model which is a three statement model (including Statement of Profit & Loss, Balance Sheet, Cash Flow Statement). 

However, there are various types of financial models and they are used for different purposes. We will be discussing about these models in this article.

Types of Financial Models

  1. Three Statement Model
  2. Credit Rating Model
  3. Discounted Cash Flow (DCF) Model
  4. Comparable Analysis Model
  5. Merger Model
  6. Leveraged Buyout (LBO) Model
  7. Model with Scenarios

Three Statement Model

This is the very basic kind of model which only includes three financial statements (Statement of Profit & Loss, Balance Sheet and Cash Flow Statement), as suggested by the name. It requires one to make certain assumptions and only work on the future projections of these 3 statements. There are subsequent schedules which are required to be prepared which will support the statements including:

  1. Depreciation Schedule
  2. Fixed Assets Schedule
  3. Working Capital Schedule
  4. Debt Schedule 
  5. Tax Schedule etc.

Credit Rating Model

Credit rating Model is usually prepared by the Banks, NBFCs or other Financial Institutions for the purpose of assessing credit worthiness of the borrower. It is only prepared for the purpose of extending debt funding to the borrower. 

It involves working on various ratios including liquidity (like DSCR), Profitability (Interest Coverage Ratio, Profit Margins), Solvency (Debt Equity Ratio, Total Liabilities to Equity Ratio etc.) Credit Rating Model stresses upon the structure of interest payments and principal repayments by the borrower in a timely manner. 

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Discounted Cash Flow (DCF) Model  

DCF Model is another prominent type of model which is prepared by Investment Bankers, Management Consultants, Private Equity or Venture Capital people to conduct valuation through cash flows of the company.

They are two types of valuations- Absolute Valuation and Relative Valuation. Absolute Valuation consists of valuation performed through DCF, Dividend Distribution Method etc. Relative Valuation consists of valuation conducted through Trading and Transaction Comparable. 

Valuation using DCF method is usually prepared in DCF model. It is an addition of three statement model with valuation calculation which is an extension from the forecasted cash flows.

Comparable Analysis Model

Comparable Analysis Model is very similar to DCF Model. It is also a composite of three statement model and the valuation. However, the only difference in Comparable Analysis model is that it is made through comparable analysis valuation or valuation multiples using trading and transaction comparable. 

Trading comparable is performed through assessing the valuation multiples of similar companies listed in the stock exchanges and transaction comparable is performed through evaluating the fund raising or M&A transactions of similar companies happened in the past.

Merger Model

Merger Model, as the name suggests, is prepared specifically in case of merger or acquisition of the target by the acquirer. This is a unique type of model which captures the financials and financial performance of both the companies (Target and the Acquirer) with the adjustments of their synergies.

Typically, there are three steps to prepare a merger model as listed below:

  1. Preparing a separate model of the acquirer with future projections
  2. Preparing a separate model of the target with future projections
  3. Merging both the models into keeping some of the adjustments for the synergies which both the companies will bring to each other’s business.

Leveraged Buyout (LBO) Model

Leverage Buyout is a situation in which the acquirer buys a target company using very small portion of his own capital and a major portion of debt or non-equity source which is raised from the market (Banks, NBFCs, Financial Institutions etc.). Assets of the both the companies usually become the collateral of the loan in this situation. 

The model is built keeping in mind both the situations:

  1. Acquisition of the target company
  2. Raising loan from the market through collateralizing assets of the companies

Major characteristic of a leveraged buyout model is that it only considers debt or non-equity source (like, mezzanine debt, subordinate debt etc.) as a source of external capital in order to earn highest return from the investment as debt is the cheapest source currently which is available in the market.

Model with Scenarios (Convertible Model)

This is a unique type of model which is prepared by high skilled financial analysts. They link the whole model in such a manner that one can see different projections of different scenarios in just one model. The same model shows different results when one changes the scenarios from the assumption sheet.

Usually model with scenarios are prepared keeping three situations in mind:

  1. Optimistic (Management)
  2. Actual (Base)
  3. Pessimistic (Conservative or Investor) 
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