What is Investment Banking?
Investment banks are specialised divisions in the banking and finance industry that primarily deals with high-profile clients and corporations to help them raise funds from the investors or the public. Investment banks act as mediators between investors who are looking for profitable investment opportunities and borrowers who are seeking funds to grow and expand. Investment banks also act as underwriters in case of Initial Public Offerings (IPOs) and help their client raise funds from the public by issuing shares.
They conduct thorough research and evaluate the company’s worth that is reflected in the price of share set by the investment banks. Investment banks also perform additional functions like providing investment guidance to clients on specific financial tools and products. They also help companies with the merger and acquisition deals to identify the best fit for them. Let’s delve deeper into the roles and responsibilities of investment bankers and how they add value for the investment banks.
Roles and responsibilities of an investment banker
Investment bankers have a huge role to play in the functioning of an investment bank, the role of an investment banker is very dynamic, to say the least. Investment bankers have a wide range of responsibilities and in the aggregate, they help to effectively channel funds in the economy by connecting borrowers with investors. The primary goal of any investment banker is to help raise capital for their clients by leveraging their network and expertise.
The exact set of responsibilities of an investment banker might vary depending on the type of firm they work at and the capacity in which they are working there. There are two ways of raising funds for a corporation, i.e. debt and equity. In case of debt, a corporate bond is issued by the corporation seeking to raise funds; the investors buy the corporate bond and loan out the funds to the company. The company that has issued the debt has to pay interest on the loan amount as per the terms and conditions of the agreement.
Another way of raising funds is by selling the shares of a corporation using Initial Public Offering (IPOs) Investment bankers are responsible for helping with the valuation of the company which is about to go public. They help to find the optimum price for the company’s stock to avoid the case of under subscription. The launch of an IPO has a major impact on the company’s success. Good investment bankers help to boost the success probability for a company’s IPO.
Another major roles and responsibilities of investment bankers are to help facilitate the merger and acquisition deals. Mergers and acquisitions are done by the companies to profit collectively from improved synergy and avoid competition in the market. Companies also enter into merger and acquisition deals to venture into new market segments and expand territories efficiently. Investment bankers work in an advisory capacity to help facilitate the mergers and acquisition deals by leveraging their large professional network and expertise in the domain.
Investment banking career
Investment banking is considered as one of the most prestigious career options in the financial domain and is among the most rewarding career opportunities in the contemporary. Its lucrative perks and remunerations also invite a lot of competition. You need to stand out from the competition to succeed in this field. It requires a lot of dedication and hard work to become a successful investment banker. One can opt for an investment banking course by reputed institutions like Imarticus learning to obtain practical knowledge & skills that will help to boost their job prospects and help them stand out from the competition.
Also Read: How To Become Investment Banker