Investment banking

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Investment banking

  1. 1. Investment Banking INTRODUCTION ‘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. Therefore, 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. They assist public and private corporations in raising funds in the capital markets both equity and debt, as well as in providing strategic advisory services for expansion acquisitions, mergers and other types of financial transactions. Investment banking is much wider term than merchant banking as it implies significant fund based exposure to the capital market. Internationally, investment banking have progressed both in fund based & fee based segments of industry. In India, the dependence is heavily on merchant banking, more particularly with issue management & underwriting. However downturn in primary market has forced merchant banks to diversify & become full fledged investment banks. Over 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 & exciting segments of financial services. The future for investment banks 1
  2. 2. Investment Banking is bright with scope for merchant banks to convert themselves into investment banks. Much of the investment banking in its present form, thus owes its origins to the financial market in U.S.A due to which, American investment banks have been leader in the American & Euro market as well. Therefore, the term ‘investment banking’ can be said to be American origin. Their counterparts in U.K were termed as ‘merchant banks’ since they had confined themselves to capital market intermediation until the U.K & European markets & extended the scope of such businesses. 2
  3. 3. Investment Banking TYPES OF PLAYERS IN INVESTMENT BANKING Full-Service Firms- These are type of investment banks who have significant presence in all areas like underwriting, distribution, M&A, brokerage, structured instruments, asset management etc. They are all rounder 0f the game. Commercial Banks- Commercial Banks operating through “Section 20” subsidiaries referring to the subsidiaries formed under section 20 of the Glass- Steagall Act which were allowed to carry on limited investment banking services. Boutique Firms-These are the type of players which specialist in particular areas of investment banking. Brokerage Firms- These firms offers only trading services to retail & institutional clients. They have huge investor base which is also used by underwriters to place issues. Asset Management Firms- These firms offer on investment services. This 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. 3
  4. 4. 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. On the regulatory front, the Indian regulatory regime does not allow all investment banking functions to be performed under the entity for two reasons- (a- To prevent excessive exposure to business risk under the one entity. (b-To prescribe & monitor capital adequacy & risk management mechanisms. -Therefore 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 adequacy requirements & leveraging capability for each business have been prescribed differently under relevant provisions of law. - Therefore, Indian investment banks structure their segments in different corporate entities to able to meet regulatory norms. For e.g. it is desirable to have merchant banking in separate company as it requires a separate merchant banking license from the SEBI. However, since banks are subject to the Banking Regulation Act, they cannot perform investment banking to a large extent on the same balance sheet. Asset management business in the form of mutual fund requires a three-tier structure under the SEBI regulations. Equity research should be independent of the merchant banking business so as to avoid the kind of conflict of interest. Stock broking has to be separated into a different company as it requires a stock exchange membership apart from SEBI registration. 4
  5. 5. Investment Banking - The Indian investment banking industry has a heterogeneous structure. The bigger investment banks have several group entities in which the core & non- core business segments are distributed. Others have either one or more entities depending upon the activity profile. The heterogeneous & fragmented structure even if Indian investment banks are classified on the basis of their activity profile. Some of such as- SBI,IDBI, ICICI, IL & FS, Kotak Mahindra, Citibank & other offer almost whole of investment banking services permitted in India. Among these, the long term financial institutions transforming themselves into full service universal banks. They also have full service investment banking under their fold. Other entities such as NBFCs or subsidiary of public sector banks mainly offer merchant banking & corporate advisory services. There 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. At the middle level are several niche players including the merchant banking subsidiaries of some public sectors banks. Some of these subsidiaries have been either shut down or sold off in the wake of the securities scams. - However certain banks such as Canara Bank & Punjab National Bank have had successful merchant banking activities. Among the middle level players are also merchant banks structured as non- banking financial services companies such as Rabo India Finance Ltd., Alpic Finance etc. There are also in the middle level, some pure advisory firms such as- Lazard Capital, Ernst & Young, KPMG, Price waterhouse coopers etc. At the lower end are several niche players & boutique firms, which focus on one or more segments of the investment banking spectrum. 5
  6. 6. Investment Banking POTENTIAL FOR INVESTMENT BANKING IN INDIA The bane of Indian capital market today is lack of investor confidence. This is reflected in the poor performance of both primary & secondary markets. The causes for existing situation are many but primarily arise on account of lack of liquidity, 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. The investment banks whatever be their issue management techniques have their own capital on hold. The issues are likely to be properly appraised & priced & sponsors on OTCEI have a two year lock-in period. Similarly investment banks would hold the issues until market conditions are appropriate for issue, thus reducing the risk exposure of investors in gestation for issue. Moreover, the price of reissue will be a better indicator of issue’s performance. Investment banks make the primary market subscription. In sum, the quality of pricing, appraisal, & primary market functions will improve resulting in substantial improvement in investor confidence. Since 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. 6
  7. 7. Investment Banking SERVICE PORTFOLIO OF INVESTMENT BANKS Investment banks handle significant fund-based business of their own in capital market along with non-fund service portfolio which is offered to clients. All this activities are segmented across three broad platforms – equity market activity, debt market activity & mergers & acquisition activity. Investment banks differ in the way they conduct their activities. These differences may arise due to their evolution, strategies & the way the strategies are implemented. Other factors that can influence investment banking operations are as follows:-  Wide & narrow geographical presence like global & local firms.  Extent of integration between the activities.  Inter relationships between activities of relates industries. E.g. As those between commercial banks & investment banking industries. The activities of an investment banks depend upon the service provided. The services provided by an investment bank can be broadly given below~ 7
  8. 8. Investment Banking CORE SERVICE PORTFOLIO Non- Fund Based Fund Based Merchant Banking Service for  Management of public offers of equity & debt instruments.  Buy back offers.  Book-running Advisory & transaction service in  Project financing,  Syndicate loan  Venture capital  Private equity  Private placements of equity & debt  Business advisory & structuring  Financial restructuring  Corporate reorganizations such as Merger & acquisition, asset sales, sell-off & exit etc.  Acquisition & takeovers  Government disinvestments & privatization  Asset recovery agency services  Underwriting  Market making  Bought out deals  Investment in primary market SUPPORT ACTIVITY PORTFOLIO Non Fund Based Secondary market services  Stock broking  Derivative product  Portfolio Management  Sales & distribution  Equity research Fund Based  Venture capital  Private equity  Asset management  Proprietary trading & dealing in securities. 8
  9. 9. Investment Banking  Issue of securities, underwriting & merchant banking Investment banks play a vital role in primary market. They are responsible for finding investors for initial public offering of securities in primary market. By bringing the buyers & sellers together, they create a market. Such 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 bankers may also help as a finder for private placement of securities with institutions. They 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. A group of investment bankers join together to underwriting syndicate. The commission received by the investment bankers consist of differential or spread between purchase & resale prices. The 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, size of the issue according to the financial requirement of the issuer. It also helps in deciding time, pricing of issue which is one of the important aspects of success of the issue. Investment banks help in listing of issue, issue of prospectus underwriting of issue etc. The primary market which was quite small in India was revitalized with the abolition of the Capital Issuers (control) Act 1947 & the passing of the Securities & Exchange Board of India Act, 1992. The SEBI functions as the regulator for the capital markets similar to its counterpart, the SEC 9
  10. 10. Investment Banking in USA. SEBI vide its guidelines dated June 11, 1992 introduced free pricing of securities in public offers for the first time in India. The purpose of this law is to require security issuers to fully disclose all information that affects the value of their securities. Over the last ten years, there have been two distinct phases of primary market boom- the first between 1992-1996 & the second between 1998-2001. The third wave of the primary market issuers could be shape up in near future. This market is very closely regulated by SEBI. 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. Once the private placement markets also come under regulatory stipulations, investment banks would have a wider role to play in such issuances.  Mergers & Acquisitions Advisory The merger & acquisitions industry was pretty nascent in India prior to 1994 & continues to be tiny compared to the global scale transactions. However, two main factors that given below given a big push to this industry are:  The forces of liberalization & globalization that have forced the Indian industry to consolidate.  The intitutionalisation of corporate acquisitions by SEBI through its guidelines, popularly known as the Takeover Code. One of the cream activities of investment banks has always been M&A advisory. The larger investment banks specialize in M&A as a core activity. While some of them provide pure advisory services in relation 10
  11. 11. Investment Banking M&A, other valid merchant banking licences from SEBI also manage the open offers arising out of such corporate events. The investment bankers play the role of an advisor in M&A deal. The financing capability of the investment banks is beginning to play a crucial role in securing the goal. Those 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 buyer/seller, in working out the terms of the transaction, financing the structure, arranging bridge loans. It is necessary that the M&A group keep a close watch on the various industries, companies in order to identify the potential M&A candidate. Similarly, close relationship with the securities research people, traders also help to identify the companies vulnerable to takeovers. The task of doing M&A deals begins with analyzing & structuring the transaction. This comprises of analyzing the companies that offer attractive strengthening or diversification possibilities & then which among these could be purchased. The M&A group will value the prospect companies & estimate what price will have to be paid to acquire them. Once the target for the merger or acquisition is identified, the banks would advice the firms on how to approach for that. Financing is the final aspect in structuring an M&A. The form of financing includes cash, common stocks, preferred stocks or debt or convertible securities. When these negotiations reach to a point agreement, the investment banks of the parties must ensure that all the regulatory & legal aspects of the deal are complied with. Thus investment bankers act as chain for companies. 11
  12. 12. Investment Banking  Asset management services This 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 & adjusting portfolio. Asset management 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 hi-tech, hi-volume, low margin business, revolutionized by advances in computer technology & information exchanges. Asset management services are growing at the rate 15-20%. The primary reason for such growth is the growing need to diversify beyond domestic markets to reduce risk & boost returns. Custody fees are based on the value of assets under consideration. This increased competition, banks fees are falling to levels insufficient to cover operating expenses. This leads to diminishing interest in custody services. Most of the top financial group in India which investment banking businesses such as the –ICICI, the IDBI, Kotak Mahindra, DSP Merrill Lynch, JM Morgan Stanley, SBI also have presence in the asset management business through separate entities. As per the three structure propounded by SEBI, the parent organization acts as the sponsor of the fund & the fund itself is constituted as a trust. 12
  13. 13. Investment Banking  Secondary market activities Investment banks also indulge in proprietary trading. Some investment banks have proprietary trading desks which take risk on of institution’s behalf, based on a view of economic & market perceptions & expectations. The trader in securities or derivatives for the account of the firm itself rather than on behalf of it’s clients. Proprietary trader tends to take decisions based on detailed technical & fundamental research, analytic calculations & time series forecasting. The banks incur profit out of the price movement in the market. Secondly, as a market maker the trader investment banks take position in the market through purchase & sale of equities, debt & other securities, execute the customer orders & manage the customers, institution’s market risk. Investment banks perform the following functions:-  The traders of investment banks help in making market. The traders maintain a position in the stock that their firms has underwritten, quote the bid & ask prices & sell at those price.  Advise the salespeople, client & research analysts on the market activity & pricing for different equity issues.  Put major trades together by negotiating with the salespeople, client & the other dealers.  Manage the firm’s investment risks.  Develop a sound knowledge about the markets, companies & the industries. The commonly traded securities by investment banks include the sovereign securities, equities, money market instruments, investment grade corporate debt, high yield debt, derivatives, mortgages, etc. Most of the universal banks such as ICICI & IDBI & Kotak Mahindra have their broking & distribution firms in both the equity & debt 13
  14. 14. Investment Banking segments of secondary market. In addition several other investment banks such ad JM Morgan Stanley, DSP Merrill Lynch 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 specialization for investment banks. Derivative trading, & risk management & structured product offerings are the new segments that are fast becoming the areas of future potential for Indian Investment banks. The securities business also provides extensive research offerings & guidance to investors. The secondary market services cater to the both the institutional & non- institutional investors.  Full service brokers & Discount brokers Investment banks act as Full service brokers & Discount brokers.  Full service brokers provide a whole range of services, including giving specific investment advice. They keep close tracks of the markets & keep the client abreast of opportunities that suit their objective. They also offer detailed about the clients financial picture, structure & monitor the assets, make recommendations about investments & implement the transactions about investments & implement the transactions as required. A full service brokerage therefore suits those investors who do not have the time to watch the markets.  Discount brokers are called so because they generally charge lower fees than the full service brokers do. Investors who like to do their own research & make their own decisions use discount brokers. Discount brokers offer little or no advice & merely execute the transaction as ordered. 14
  15. 15. Investment Banking  Sales & Distribution 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 Returns. The link between the two is filled by investment banks, in particular, by the sales & Distribution operations. Sales & Distribution bring together the primary issuers & secondary sellers with the buyer of the instruments. These could be equity, fixed income instruments. In general, there could be two product categories:  Institutional sales group  Retail segment  Institutional segment The salespersons at the investment banks have counterparts at the institutions. These ‘counterparts’ are normally referred to as buy- side analysts or portfolio managers. If the investment bank’s analyst is respected, they also act as sell-side analyst, as a part of investment decision.  Retail segment Investment bank’s act as an advisor to his clients. He is more multi- market oriented & can recommend stocks as well as bond unlike specialists in the institutional product group. The success of a salesperson reflects not just in his selling abilities, but also his ability to fulfill client expectation 15
  16. 16. Investment Banking  Research The 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. The 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. An efficient research team provides an information advantage to the investment banks that can use it for in-house trading purpose & also can use for the benefit of their clients.  Equity Research The Equity Research division of a securities house or investment bank provides in-depth stock market analysis & a broad perspective & knowledge regarding the industry trends. They also provide an insight into the including valuation of quoted companies & evaluation of companies prospects. The research evaluations usually include:  Industry evaluations, which analyze the trends in the industry, compare the company’s performance to the industry averages.  Company evaluations that examine the particular company, its financial position, its securities from an investment perspective & thereby recommend a buy/ hold/ sell decisions.  Technical analysis that focuses on the performance of the securities in the various markets.  Portfolio analysis that helps to manage the client’s investment objective with a suitable investment program. Like this investment bankers perform equity research service. 16
  17. 17. Investment Banking  Fixed-income research The fixed 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. Fixed- income research is considerably more quantitative than equity research. The analysts in this division assess the fairness of the spreads between the fixed- income instruments of different maturities & different risk classes & makes trading recommendations based on the deviations from the fair spreads, estimate the value of the options in the mortgages & mortgage backed products. The fixed income research groups work closely with the clients in order to identify their needs & work to provide customized solutions to the clients.  Institutional investing Institutional investors have been a recent phenomenon in the Indian capital market, Which till then had the presence of a handful of public financial institutions such as the & the insurance companies. The term lending institutions such as the IFCI did not participate in secondary market dealing as a matter of policy. With the advent of liberalization, there are presently a large number of domestic institutional investors in the secondary market apart from approved foreign institutional investors. In addition, institutional investment have risen significantly in the primary markets through venture capital & private equity investments by investors in both the domestic & non- resident categories. Several of the leading investment banks either have dedicated venture funds or private equity funds that invest on primary market through their dealings & market making activities. 17
  18. 18. Investment Banking  Wealth management services Wealth management services also called as private banking. Many reputed investment banks nurture a separate segment to manage the portfolio of high networth individuals, households, trust, & other type of non- institutional investors. This 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 non-discretionary portfolio & in the latter case, it becomes a discretionary portfolio. Such 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.  Corporate Advisory Investment banks in India also have large practice in corporate advisory services relating to project financing, corporate restructuring through equity repurchase including management of buyback offers under section 77A of the Companies Act,1956 raising private equity, structuring joint- ventures & strategic partnerships & other such value added specialized areas. Several investment banks have longstanding relationships with government & firms. Their advise is sought because investment banks are not big traders & distributors of securities or do not have a commercial parent. 18
  19. 19. Investment Banking REGULATORY FRAMEWORK FOR INVESTMENT BANKING Investment banking in India is regulated in its various facets under separate legislations or guidance issued under statute. The 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. SEBI. However universal banks & NBFC investment banks are regulated primarily by the RBI 9in their core business of banking or lending & so far as the investment banking segment is concerned, they are also regulated by SEBI. An overview of the regulatory framework is furnished below:- 1. At the constitutional level, all investment banking companies incorporated under the Companies Act 1956 are governed by the provision of the act. 2. Investment banks that are incorporated unde4r a separate statute such as the SBI or the IDBI are regulated by their respective statue. IDBI is in the process of being converted into Companies Act. 3. Universal Banks are regulated by RBI of India under the RBI Act 1934 & the Banking Regulation Act which put restrictions on the investment banking exposures to be taken by the banks. The RBI has relaxed the exposure limits for merchant banking subsidiaries of the commercial banks. Till now, such companies were restricting their exposure to a single entity through the underwriting business & other fund based commitments such as standby facilities etc. to 25% of their net owned funds. Therefore these companies are now on par with 19
  20. 20. Investment Banking other investment banks which can do so upto 20 times their net owned fund. 4. Investment banking companies that are constituted as non-banking financial companies are regulated operationally by the RBI under Chapter IIIB section 45H & 45QB of the RBI Act, 1934. Under these sections RBI is empowered to issue directions in the area of resources mobilization, accounts & administrative controls. The following directions have been issued by the RBI so far:  Non-Banking Financial Companies Acceptance of Deposits (Reserve Bank) Directions, 1998.  NBFCs prudential Norms (Reserve Bank) Directions, 1998. 5. Functionally, different aspects of investment banking are regulated under the securities & Exchange Board of India Act, 1992 & the guidelines & regulations issued under. These are listed below:  Merchant banking business consisting of management of public offers is a licensed & regulated activity under the SEBI Act (Merchant Bankers), 1992.  Underwriting business is regulated under the SEBI (underwriters) Rules & Regulations, 1993.  The activity of secondary market operations including stock broking are regulated under the relevant by-law of the stock exchange & the SEBI (stock broker & sub broker) Rules & Regulations, 1992. Besides for restricting unethical trading practices, SEBI has issued the SEBI (Prohibition of fraudulent & unfair trade practices relating to securities markets) Regulations 1995& also SEBI prohibited insider trading under regulations, 1992. 20
  21. 21. Investment Banking  The business of asset management as mutual funds is regulated under the SEBI (Mutual Fund) Regulations, 1996.  The business of portfolio management is regulated under the SEBI (Portfolio mangers) Rules & Regulations, 1993.  The business of venture capital & private equity by such funds that are incorporated in India is regulated by the SEBI(venture capital) Regulations,1996 & by those that are incorporated outside India is regulated under the SEBI ( Foreign venture capital funds) Regulations,2000.  The business of institutional investing by foreign investment banks & other investors in Indian Secondary markets is governed by the SEBI (Foreign Institutional Investors) Regulations 1995. 6. Investments banks that are set up in India with foreign direct investment either as joint ventures with Indian partners or as fully owned subsidiaries of the foreign entities are governed in respect of the foreign investment by the Foreign Exchange Management Act, 1999& Foreign Exchange Management (Transfer or issue of a person resident outside India) Regulations 2000 issued there under as amended from time to time through circulars issued by the RBI. 7. Apart 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 RBI. 21
  22. 22. Investment Banking SKILLS SUGGESTED FOR INVESTMENT BANKERS  Technical Skill  Academic Background- In the early days of investment banking, not much importance was attached to academic background. Today, the business has become very complicated and the skill requirements have multiplied. Consequently, investment banks find it important to recruit people with the right academic credentials. Typically, for most of the important jobs, an MBA is a must. Investment banks rely heavily on campus recruitments  Conceptual Soundness- One of the major benefits for a professional in an investment bank is the learning associated with work. The financial skills of an expert are tested to the core while handling a complicated deal. Comprehensive and in-depth knowledge of financial and business concepts are essential to sustain business. Multiple relationships between various factors render decision-making difficult. Financial solutions can be provided to the clients only when the advisor is competent to understand all or at least a majority of them. Before practical solutions emerge, the tools for decision-making will give greater choice to the solution provider. A strong grounding in theory and concepts facilitates this.  Product Specialization- One way to specialize in an investment bank is through products. An expert in a particular product, say hybrid instruments, can work out financial solutions for any client across the industries. Each client has his or her individual risk taking ability. To cater to the client on an in basis, appropriate 22
  23. 23. Investment Banking products that would suit their risk profile should be identified. The clients will also feel at home while dealing with a product specialist.  Legal Knowledge- While clear cut guidelines can be issued to the traders regarding their market related activities that are governed by the law, the complexity multiplies for an M&A deal. The regulators’ guidelines have to be strictly followed, even while envisaging a combination. Legal knowledge is also important for structuring such deals, which will help identify the constraints associated with proposed solution. The situation gets more intense when the deal is a cross-border M&A proposal. Apart from the knowledge of the inland laws, foreign laws also have to be considered. Any regulation by the foreign government can make an otherwise desirable deal, unviable.  Knowledge of Capital Markets and Functioning- More than any other industry, it is the investment banking industry that has a direct bearing on the way capital markets function. Any changes in the capital market regulations affect the brokerage side of the business, along with the trade clearing and settlement houses. The trading personnel should be conversant with the regulations, guidelines, procedural formalities and actual trade execution processes involved in capital market. E.g. Trading system involves a lot of additional skills than online trading. He has to be conversant with the codes, symbols and conventions followed by the market. Quick signaling and accurate interpretation are of utmost significance. Any mistake in these would lead to faulty execution of orders and might entail additional costs to the firm in correcting the errors.  Knowledge of Regulatory Bodies involved in the Various Operations- It is necessary for an investment banker to be aware of all the regulatory bodies that govern the activities in which he/she is 23
  24. 24. Investment Banking involved. A thorough knowledge of all such bodies is absolutely essential to perform extraordinarily. In India, the SEBI & central bank acts as a watchdog and regulator of market related activities.  Knowledge of International Business Scenario and Economic Trends:-Though 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. Salespersons, who also act as financial consultants/advisors, should essentially be aware with economic and business cycles, lest they lose the respect and trust of the client. The requirement for global perspective and international exposure is becoming increasingly important. The firm should offer services across the national borders to the corporate clients and informed services are possible only when the employee is well- equipped with international business information.  Knowledge of Software Tools, Developments in the Field of Information Technology- One of the most important technical skills is the usage of computers, tools and internet technologies. Marketing, brokerage, research and capital mobilization have all undergone sweeping changes owing to technology. The securities trader has changed into a tech-savvy professional, executing online orders & maintaining databases. The technology helps management and other departmental professionals and even the clients to disseminate such data in negligible time. Asset managers have now complicated tools for scientific and in-depth valuation of portfolios. Comp frameworks can be solved with minimum effort using technology. 24
  25. 25. Investment Banking  Communication Skills  Ability to Cater to the Audience According to its Awareness Levels- Communication skills include both the means of communication — written and oral. However, the audiences vary extensively, and hence, the requisite communication skills also differ widely. A marketer handling individual investors will necessarily have to keep the content very simple and express t in layman’s terms. Usage of financial terms & jargons will not fetch results. Cash flows, the characteristics of the instruments & the risk class to which the investment belongs to must be explained in simple & easily understandable terms.  Negotiation Skills- Negotiation 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. M&A transactions are the toughest assignments for negotiations. Even a friendly transaction would be difficult if not for patient and mutually negotiations. The common issues that pertain to negotiation are — terms of offer, offer price, post merger integration, organization and reporting structure, business lines to be developed above all dealing with the overlapping functions. While negotiating, the banker should always keep the prime object in the mind & quickly evaluate the various counter offers & suggestions made by other party.  Personality Traits- Personality Traits plays an important role in developing the skill set of an investment banker. Creativity is an important feature. It comes in use while handling prospectus, 25
  26. 26. Investment Banking clients & team members. It is essential when solutions are to be identified for complex problem. Innovations & creativity are required structure deals.  Other Skills  Marketing Skills- The marketing skills would be an application of skills mentioned above. One of the important marketing skill would be relationship management. Unlike most other industries where relationship plays a facilitating role in conducting business, it is fundamental issue in the investment banking industry. An attitude for creating, establishing & maintaining relationships, during boom & down period, is of utmost importance in getting mandates.  Inter-Personal Skills-Inter-personal skills are basically blended from communication skills, and personality traits. They include interactions with superiors, subordinates, colleagues, clients, competitors, team members and even politicians and public office bearers. Inter-personal skills come to the fore during team exercises where diplomacy and manners become essential. Team exercises can also include dealing with members from other departments or even with other firms. Such situations call for greater application of team skills and an element of mutual respect towards each other.  Networking Skills- Networking refers to the process of developing a web of contacts and acquaintances. Some of the special attributes required to develop networking abilities would include: • Knowledge of human psychology; • Presence of mind to apply the appropriate skills as situation demands; • Approaching through proper channels that would lend credibility respectability to contacts; • Persuasion skills; 26
  27. 27. Investment Banking • Highest standards of professionalism. ROLE OF INVESTMENT BANKERS IN DEVELOPING AN ECONOMY. Investment Bankers Banks & Financial Investment Institutions (financial economy) Capital Market / Money Market (financial economy) Foreign Exchange Market (financial economy) Real Estate / Gold etc (real economy) Commodity futures Market (financial economy) Business activity Production of goods and services (real economy) Investors (generate savings) 27
  28. 28. Investment Banking EXPLANATION 1) Investors: Investors are the persons who generate savings. The investors who generate savings will definitely like to earn something out of it rather keeping the funds idol. So the question of investment arises and with the investment risks arises. So for proper and safe deployment of funds investment bankers help them in the process of investing their funds. 2) Role of investment bankers: The investment bankers act as an intermediary between the investors and capital market which consists of primary market and secondary market. The investment bankers with their intense research guide them to invest their money in banks/FI, Capital and money market, foreign exchange market, commodity market, real estate/gold etc. Proper deployment of funds will help the investors to earn good returns with safety of their initial invested funds. 3) Business Activity: All these investments from the investors will lead to business activity in different sectors. The funds deployed by the investors will be utilized by the users of the deployed funds will lead production of goods and services in the economy. 4) Twin Advantage: The investors will not only earn returns, capital appreciation etc but also they will utilize the goods and services produced by the users of the deployed funds. This will in return create satisfaction in the minds of consumer/investor and will also earn 28
  29. 29. Investment Banking profits for the user of the funds because of utilization of goods and services. This will be a win-win factor and also will develop the economy as a whole. CASE -STUDY INTRODUCTION Kotak Securities Ltd., is India's leading stock broking house with a market share of around 8%. Kotak Securities Ltd. has been the largest in IPO distribution. The accolades that Kotak Securities has been graced which include: Prime Ranking Award (2003-04) - Largest Distributor of IPO's Finance Asia Award (2004) - India's best Equity House Finance Asia Award (2005)-Best Broker In India The company has a full-fledged research division involved in Macro Economic studies, Scrotal research and Company Specific Equity Research combined with a strong and well networked sales force which helps deliver current and up to date market information and news. Kotak Securities Ltd is also a depository participant with National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL), providing dual benefit services wherein the investors can use the brokerage services of the company for executing the transactions and the depository services for settling them. Kotak Securities has 122 branches servicing more than 1, 70,000 customers and coverage of 187 cities. Kotaksecurities.com, the online division of Kotak Securities Limited offers Internet Broking services and also online IPO and Mutual Fund Investments. Kotak Securities Limited manages assets over 2500 crores of Assets under Management (AUM) 29
  30. 30. Investment Banking .The portfolio Management Services provide top class service, catering to the high end of the market. Portfolio Management from Kotak Securities comes as an answer to those who would like to grow exponentially on the crest of the stock market, with the backing of an expert. AREA OF BUSINESS FOR KOTAK SECURITIES Kotak Securities has five main areas of business:  Institutional Business This division primarily covers secondary market broking. It caters to the needs of foreign and Indian institutional investors in Indian equities (both local shares and GDRs). The division also incorporates a comprehensive research cell with sectoral analysts who cover all the major areas of the Indian economy.  Private Client Services Private Client Services (PCS) is a special investment division for High Net-worth individuals, retail investors, Non-Resident Indian investors, trusts, corporates and banks. The investment product range at PCS is among the widest in the country and covers debt and equity, mutual funds and specialised structured investment products.  Client Money Management This division provides professional portfolio management services to high net-worth individuals, retail investors, and corporates. Its expertise in research and stock broking gives the Company the right perspective from which to provide its clients with investment advisory services.  Retail distribution of financial products 30
  31. 31. Investment Banking Kotak Securities has a comprehensive retail distribution network, comprising approximately 7000 agents, 13 branches and over 20 franchisees across India. This network is used for the distribution and placement of a range of financial products that includes company fixed deposits, mutual funds, Initial Public Offerings, secondary debt and equity and small savings schemes.  Depository Services Kotak Securities is a depository participant with the National Securities Depository Limited and Central Depository Services (India) Limited for trading and settlement of dematerialized shares. Since it is also in the broking business, investors who use its depository services get a dual benefit. They are able to use its brokerage services to execute transactions and its depository services to settle these. 31
  32. 32. Investment Banking PRODUCTS OF KOTAK SECURITIES Once you invest with Kotak Securities, you can enjoy access to a wide range of products and services to help you make the most of your investments. Easy Equity: Want your capital to appreciate fast? Invest in Easy Equity. a) Sms Alerts b) Call & Trade c) Top Gainers and Losers notification d) Super multiple e) Portfolio Tracker Easy Derivatives: The higher your risk, the greater the returns on your investments. a) Put Call ratios b) Top value traded c) Open interest d) Stock future/Stock options Easy IPO: Invest early for greater returns. a) Forthcoming issues b) New listings c) Call & Trade d) IPO news e) Open issues 32
  33. 33. Investment Banking Easy Mutual Fund: Looking to diversify your risk? Invest in Easy Mutual Fund. a) Find out NAV of a Scheme b) View Scheme details c) Mutual fund News d) Compare Schemes e) My portfolio Easy Insurance: Secure your future and your family’s. There’s more to insurance than just security. a) How does the plan work? b) Advantages of the plans c) Eligibility d) Other Benefits 33
  34. 34. Investment Banking ACCOUNT TYPES The first question in an individuals mind where to open an account Want to start investing? Open an investing account with KOTAK SECURITIES and begin right away. Whether you are a beginner or an expert trader, they have different accounts to suit your needs: Kotak Gateway Account: If you are new to trading, Kotak Securities opens the gateway to a world of investing opportunities for you - online and on-phone. Their in-depth research will guide you in making smart investment decisions. Open the Kotak Securities Gateway Account and get started. Your Benefits: ⇒ Kotak Securities Knowledge Center that helps you learns more about stock markets and investments. ⇒ Enjoy higher returns by investing early - through Easy IPO. ⇒ Research Reports on the economy, select industries and companies help you make informed investment decisions while dealing in Easy Equity. ⇒ Research advice via Kotak Securities SMS alerts, so you don't miss out on important buying and selling opportunities. ⇒ Buy and sell stocks on phone using Call & Trade. ⇒ Access to 14 top-performing mutual funds through Easy Mutual Fund. 34
  35. 35. Investment Banking ⇒ Free news and market updates. ⇒ Exposure of upto 15 times your initial margin on select stocks with Super Multiple. How to activate? You can activate Kotak Securities Gateway with any amount between Rs 20,000 to 5, 00,000/- as margin. This can be in form of cash deposit or the value of the shares you buy. Open your account: Step 1: To 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. You can call them and they will have their representative meet you and help you open the account You can also email them at gateway@kotaksecurities.com. Their representative will get in touch with you. Step 2: They will inform you as soon as your account is activated, and you can start trading instantly ⇒ This procedure is common for all accounts. 35
  36. 36. Investment Banking Kotak Value Account: Becoming a wise investor requires a good deal of research and education. You must learn not only how stocks and mutual funds work, but also to make your own investment decisions. The Kotak Securities Value Account is specially equipped to make investing simpler for you. Your benefits: ⇒ Kotak Securities Knowledge Center that helps you learn more about stock markets and investments. ⇒ Their Research Reports on the economy, select industries and companies help you make informed investment decisions while dealing in Easy Equity. ⇒ Buy and sell stocks on phone using Call & Trade. ⇒ Invest in IPO’s with Easy IPO. ⇒ Access to 14 top-performing mutual funds through Easy Mutual Funds. ⇒ Research advice via Kotak Securities SMS alerts, so you don't miss out on important market movements. ⇒ Free news and market updates. ⇒ The facility to trade in amounts 5 times greater than your capital. ⇒ Lower delayed payment interest. ⇒ Access to K.E.A.T Desktop - specialised financial software that makes trading easier. 36
  37. 37. Investment Banking ⇒ Exposure of upto 15 times your initial margin on select stocks with Super Multiple How to activate? You can activate Kotak Securities Value with any amount between Rs. 5, 00,000/- and Rs. 10, 00,000/- as margin. This can be in form of cash deposit or the value of the shares you would have currently. 37
  38. 38. Investment Banking Kotak Privilege Circle Account Kotak Securities offer you nothing but the best. At Kotak Securities, they make sure you get to enjoy premier and top-line trading services - with Kotak Securities Privilege Circle Your benefits: ⇒ A dedicated Privilege Circle customer service desk offers you assistance in opening accounts, handling day-to-day problems, and more. ⇒ Independent market expertise and support through a dedicated relationship manager. ⇒ Place orders phone through Call & Trade. ⇒ Access to Easy IPO and 14 top-performing mutual funds through Easy Mutual Funds. ⇒ Their Research Reports on the economy, select industries and companies. ⇒ Research advice via Kotak Securities SMS alerts, so you don't miss out on important market movements. ⇒ 6 times exposure on the margin. ⇒ Access to K.E.A.T Premium - an exclusive premium analysis tool with 52 Indicators for Technical Analysis, Derivative Chains, Multiple Watchlists, and more. ⇒ Lowest delayed payment interest. 38
  39. 39. Investment Banking ⇒ Exposure of upto 15 times your initial margin on select stocks with Super Multiple How to activate? You can activate Kotak Securities Privilege Circle with any amount more than Rs. 10, 00,000/- as margin, by way of cash or stock Kotak High Trader Account: For daily traders, they have the Kotak Securities High Trader exposure - an account specially designed for intra-day traders. This is an Auto Square Off product where you can enjoy the benefits of intra-day trading. All open orders will be automatically squared off at 3.10 pm. Your benefits: ⇒ 6 times exposure on the margin. ⇒ Access to K.E.A.T Desktop - specialised financial software that makes trading easier. ⇒ Access to KEAT Premium - an exclusive analysis tool with 52 Indicators for Technical Analysis, Derivative Chains, Multiple Watchlists, and more. ⇒ Intra day calls from our experts for a nominal fee. ⇒ Their Research Reports on the economy, select industries and companies. ⇒ Research advice via Kotak Securities SMS alerts, so you don't miss out on important market movements. ⇒ Free news and market updates. ⇒ Access to 14 top-performing mutual funds through Easy Mutual Funds. ⇒ Place a paper-free order for IPO, through Easy IPO. 39
  40. 40. Investment Banking How to activate? You can activate Kotak Securities High Trader with any amount less than Rs 5, 00,000/- as margin, by way of cash or stock. Kotak Freeway Account: Trading unlimited! Kotak Securities Freeway enables you to trade as many times as you like - at a fixed brokerage. Just pay a fixed brokerage of Rs. 999/- a month and trade as many times as you want Your benefits: ⇒ 4 times exposure on the margin. ⇒ Access to K.E.A.T Desktop - specialised financial software that makes trading easier. ⇒ Intra day calls from our experts for a nominal fee. ⇒ Their Research Reports on the economy, select industries and sectors and companies. ⇒ Research advice via Kotak Securities SMS alerts, so you don't miss out on important market movements. ⇒ Free news and market updates. ⇒ Access to 14 top-performing mutual funds through Easy Mutual Funds. ⇒ Place a paper-free order for IPO, through Easy IPO. How to activate? 40
  41. 41. Investment Banking You can activate Kotak Securities Freeway with any amount less than Rs. 1, 25,000/- as margin, by way of cash or stock. PLANNING WITH KOTAK Why you need to plan? When 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 life's changes. You need to plan to protect yourself and your family against financial risks. Sure, 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. Step 1: Sound financial planning can help you chart a clear course to your retirement goals. So no matter whether you're just starting out or approaching the end of your career, Kotak Securities provides you with comprehensive planning and support. Step 2: Plan taxes as ongoing process and not a one-time event. Good planning will increase your after-tax cash flows, and may mean greater savings during tax time. Step 3: Make your money work smarter and harder. Get higher returns from your investments. Here's how. 41
  42. 42. Investment Banking Say if you were to invest Rs. 100. Tax-saving schemes like Post Office Schemes, Mutual Funds and Government Bonds are safe and long-term avenues. Fixed Deposits also give you a 5.5%* interest, while the share market brings you returns of 18.88%#. PORTFOLIO MANAGEMENT Why Portfolio management? As you drive towards your objective of creating wealth, you need to employ the right investment vehicles, at the right time. Given the unpredictable nature of equity markets, staying on course requires expert maneuvering, time and effort. That's where Portfolio Management comes in. It gives your portfolio the edge by skillfully sifting through available investment opportunities to help you reduce risk and maximize your returns; even as you are left with ample time to focus on more pressing matters. Benefits of Portfolio management with Kotak Kotak Portfolio Management lets you effortlessly build and maintain a safe and healthy investment, providing you with multiple benefits. Count on experience Their Portfolio Managers bring 10 years of experience to the table, with an in-depth understanding of diverse investment instruments. Stay in the loop 42
  43. 43. Investment Banking Through quarterly account performance statements, delivered to your doorstep. Go digital, stay updated They e-mail all your financial statements to you, doing away with the hassle of paperwork. When in doubt, just ask KOTAK SECURITIES have a dedicated website and a customer service desk to address all your queries, anytime. REASEARCH OF KOTAK SECURITIES Kotak Securities Research Center Welcome to the Kotak Securities Research Center - the special research cell where some of India's finest financial analysts bring you intensive research reports on how the stock market is faring, when is the right time to invest, when to execute your order and more. Depending on what kind of investor you are, they bring you fundamental or basic research and technical research. As an investor with Kotak Securities, you get access to these research reports exclusively. You get access to the following reports. Intraday calls: These calls are provided according to changing market situations. Be it news, momentum or technical perspectives; be updated with what our experts advise you to do during the market hours. Special Report: These reports give you an in depth coverage on special events such as the Budget Report, Quarterly results, RBI Credit & Monetary Policy, Monsoon Report and much more. 43
  44. 44. Investment Banking Market Morning: A technical view summarizing the previous day movement and what is expected to happen on the current day. This report will also provide you with technical calls for trading along with various supports and resistances of chosen stocks. Daily Morning Brief: A report providing you information with fundamentally researched stocks everyday. You also have information on all daily economic, political and various other factors which affect the fundamentals of a company. Weekly Technical Analysis: This Weekly Technical Analysis brings you a complete round up of the week gone by - recommendations, major supports and resistances, what to look forward to and more. Sectoral Reports: Deciding which sector to invest in? Their Super Sector report can guide you. Know details including the effect of government policies and regulations and estimates about how the sector is expected to behave. Stock Ideas: Ever wanted to pick a needle from a stack of Hay. That's exactly what a stock Idea is. Their research desk picks out potential stocks which can provide immense scope for returns on investments. This is a report which is completely based on fundamentals. 44
  45. 45. Investment Banking Derivative Reports: You can view the put call ratio, the most active derivative contracts and the top change in open interest. You can also get FII Statistics, the top gainers and losers and the cost of carrying out various derivative contracts. Portfolio Advice: You can avail the advice of our experts by simply writing an email to them. Whether it is on choosing a stock or sector or anything regarding investments all your queries will be answered. If you need advise simply. Kotak Securities SMS Alerts: And last, but not the least, you can get these expert tips and recommendations as SMS on to your mobile phone. Kotak Securities Research Advantage: Check out the returns on investments that our clientele has enjoyed over the past year. MUTUAL FUND RESEARCH Mutual Fund Research When you decide to invest in a Mutual Fund, selecting from hundreds of Mutual Funds can get tough. With Mutual Fund Research, you can take your pick easily - from equity-based or debt-based funds, to growth funds or dividend-based funds. Quick Research for investments Get access to in-depth research. Or zero in from our concise list of funds, stocks and bonds based on your preferred criteria. 45
  46. 46. Investment Banking Analyse with in-depth research Get independent research with reports, ratings, and rankings from expert analysts; plus, insight into current analyst recommendations and their historical performance. Monitor your investments Get breaking news and set alerts for your portfolio, and track performance with watch lists INVESTING WITH KOTAK SECURITIES At Kotak Securities, this is precisely what they believe in. They are committed to make trade easy for you. They understand your level of expertise in trading and provide you solutions to fit your needs - whether you are a beginner, a seasoned investor or a professional trader. They can help you invest wisely while taking into account, the amount you wish to invest. Kotak Securities conducts research for all class of customers. Beginners Looking to invest but don't know where and how? Wondering whether online trading would be a good and reliable way to invest? At Kotak Securities, 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. Seasoned Investors Given 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. So whatever you’re life goals, 46
  47. 47. Investment Banking investing wisely could make all the difference between a fortune gained and an earning lost. Kotak Securities, help you plan investments keeping your future in mind. Super Trader If the research for beginners and seasoned are taken care of by them, super traders—having a huge volume of transactions, who are dedicated customers, research is conducted to maximize their returns with minimizing risks. MARKET SURVEY FOR KOTAK SECURITIES 1) Are you familiar with Kotak Securities? Yes No 2) Do you have an account with Kotak Securities? If No, Than please Specify? Kotak HDFC ICICI Others 3) Are you satisfied with the services provided by Kotak securities? 4) How do you find the portfolio management services of Kotak securities? Rate on the scale below Between 1-5 (1– Good, 5– Worst) 1 2 3 4 5 47 YES NO
  48. 48. Investment Banking 5) Which facility of Kotak Securities do you appreciate the most? Easy Equity Easy Derivatives Easy IPO Easy Mutual Fund Easy Insurance 6) How do you find the customer relationship management of Kotak? Rate it on the scale below? Between 1-5 (1– Good, 5– Worst) 1 2 3 4 5 7) How do you find follow up services of Kotak securities in terms of Monthly reports and others? Rate it on the scale below between 1- 5? (1– Good, 5– Worst) 1 2 3 4 5 8) Any limitations to Kotak Securities? 48
  49. 49. Investment Banking MARKET SURVEY RESULT FOR KOTAK SECURITIES. 1) Are you familiar with Kotak Securities? Kotak Securities 90% 10% Yes (%) No (%) 2) Do you have an account with Kotak Securities? If No, Than please Specify? Total No of Person Kotak (%) HDFC (%) ICICI (%) Others (%) 40 40 25 20 15 Total No of Person Yes (%) No (%) 50 90 10 49
  50. 50. Investment Banking Kotak (%) 40% HDFC (%) 25% ICICI (%) 20% Others (%) 15% Kotak (%) HDFC (%) ICICI (%) Others (%) 3) Are you satisfied with the services provided by Kotak securities? Total No of Person Yes (%) No (%) 40 62 38 Yes (%) 62% No (%) 38% Yes (%) No (%) 4) How do you find the portfolio management services of Kotak securities? How do you rate on the scale below? (1– Good, 5– Worst) Total No of Person 1 (%) 2 (%) 3 (%) 4 (%) 5 (%) 40 44 23 15 11 7 50
  51. 51. Investment Banking 5) Which facility of Kotak Securities do you appreciate the most? Easy Equity 34% Easy IPO 13% Easy Derivative s 33% Easy Mutual Fund 13% Easy Insurance 7% Easy Equity Easy IPO Easy Derivatives Easy Mutual Fund Easy Insurance 6) How do you find the customer relationship management of Kotak? Rate it on the scale below? (1– Good, 5– Worst) Total No of Person 1 (%) 2 (%) 3 (%) 4 (%) 5 (%) 40 31 27 17 13 12 1 (%) 44% 2 (%) 23% 3 (%) 15% 4 (%) 11% 5 (%) 7% 1 (%) 2 (%) 3 (%) 4 (%) 5 (%) Total No of Person Easy Equity (%) Easy IPO (%) Easy Derivatives (%) Easy Mutual Fund (%) Easy Insurance (%) 40 34 13 33 13 7 51
  52. 52. Investment Banking 1 (%) 31% 2 (%) 27% 3 (%) 17% 4 (%) 13% 5 (%) 12% 1 (%) 2 (%) 3 (%) 4 (%) 5 (%) 7) How do you find follow up services of Kotak securities in terms of Monthly reports and others? Rate it on the scale below? (1– Good, 5– Worst) Total No of Person 1 (%) 2 (%) 3 (%) 4 (%) 5 (%) 40 40 27 10 13 10 1 (%) 40% 2 (%) 27% 3 (%) 10% 4 (%) 13% 5 (%) 10% 1 (%) 2 (%) 3 (%) 4 (%) 5 (%) 8) Any limitations to Kotak Securities? LIMITATIONS 52
  53. 53. Investment Banking After conducting the survey the limitations quoted were as follows 1) Lack of Branches or Franchisee for trading purpose. 2) Telephonic transactions are at times difficult. 3) Difficulty in internet trading sometimes due to technical problem in loading of sites. 4) No proper marketing strategy. Note: Percentage rounded off to nearest figures. RECOMMENDATIONS. After studying the working of Kotak Securities for Non-Institutional investors (Investment Banking for general public) and taking into account the survey report they should further improve the quality of services provided by them in regards with transaction statement and the other limitations which are quoted by the public. Kotak securities should increase their network of branches according to customer database and also area wise. It should be done gradually as it requires lots of capital and it should also not affect the company as a whole. If the above recommendations are put into action by Kotak Securities, it will improve its profitability and goodwill of the company along with customer satisfaction. 53
  54. 54. Investment Banking CONCLUSION The future of investment banking industry as a whole looks bright. Many 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 & existing 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. This would lead to growth for capital market in general & investment banking industry also. So hereby I conclude that Kotak Securities is an upcoming brand, in the area of security business (Investment Banking), trying hard to provide various services and facilities to their clients. Now as per their recent 54
  55. 55. Investment Banking strategy they are tying to capture retail investors, in order to increase their goodwill in the market. In future the company will expand and diversify its business in terms of new products and innovations in existing products to cater to the needs of their valuable customers. BIBLIOGRAPHY. Source: Investment Banking-An Odyssey in High Finance -Pratap Subramanyam. Managing Investment Banks An Introduction -ICFAI Managing Investment Banks Advance Topic -ICFAI WIBLIOGRAPHY. Source: www. kotaksecurities.com www.google.com 55
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