I-Banking

I am returning to blogging after about 8-9 months. If you had read my last blog, you could have seen the enthu in me. New place, new people, full of expectations. Now after 9 months, I am doing my internship in Bombay. 3 terms are over, all those lofty ambitions of international i-banking summers and topping the batch have disappeared. New batch is going to join and these days I'm busy answering their queries. I feel just like it was yesterday that I got my IIML admit. Now in another 8-9 months I would be out of L.

When I joined IIML, I wanted to be an investment banker. Didnt know the ABC of Finance, leave alone investment banking. Applied to all the investment banks which came to campus, got shortlisted 2-3 and talked loftily about how exciting and challenging the field is and what not. Now I feel so embarassed when I look back at my rantings. I didnt know anything about I-Banking and I told all these to the VP, who had come down for interviewing, somehow managed to impress him with my knowledge of Glass-Steagall Act & relation between Morgan Stanley and JPMorgan (thanks to Wiki) and landed up in my current assignment.

Now I am working with that Investment Bank in Bombay. I am an Analyst here. But contrary to the popular perception about glamorous i-banking jobs, this job is a killer. I work for 14-15 hours per day, six days a week. People work like hell here. Personal life just doesnt exist.

Ok now for the million dollar question.... What do investment bankers actually do?

At Analyst level, you analyze the balance sheets and make pitches to the clients urging them for a potential M&A or fund raising or debt restructuring etc... If the clients like your pitch, they take the proposal to the next stage and ask you for a more detailed report. Once you give that, your job is over. Rest of the deal is taken care of by the Associates, VPs, MDs... Even in the intial pitches, you do a very small part of the work.If your typical output is 8 slides( the pitches are given in the form of printed ppts called a pitch book), 2-3 slides goes into the final pitch book.

Now back to I-banking, there are also a couple of other career paths here - Sales & trading and Equity/Credit Research. Sales & Trading involves buying & selling of bonds,shares & other such instruments for large buyers.It is equally paying as Corporate Finance, as my division is called here because we deal mainly with corporate houses and our work involves raising funds through IPOs, M&As etc... Equity Research is another area of investment Banking. They dont have direct clients but do sort of a syndicated service - tracking companies regularly, predicting their future cash flows, EBIT, EBITDAs and giving a recommendation on whether to buy, sell or hold the stock.It is by far the most Finance intensive job in Investment Banking. But strictly speaking, the term investment banker is used only for Corporate Finance guys, though Sales & Trading people also lay claim to it. Equity Researchers are not considered to be I-bankers.

After 2 or 3 years, you become an associate and if you are in NY or London, your peers would leave to pursue their MBA. And after another 2-3 years you become a VP. So in 6-7 years, at about the age of 30, you can actually be a VP!!!!!! But there are so many VPs in Investment banks.

To be continued...