This has been prepared a business coach who gives finance training to corporate. This is for a more informal set up/ audience as it includes more colors, themes, images and less of text.
An investment banking is a financial institution that assists individuals, corporations and governments in raising financial capital by underwriting or acting as the client’s agent in the issuance of securities or both
An investment bank is a financial institution that assists individuals, corporations, and governments in raising financial capital by underwriting or acting as the client's agent in the issuance of securities (or both).
An investment banking is a financial institution that assists individuals, corporations and governments in raising financial capital by underwriting or acting as the client’s agent in the issuance of securities or both
An investment bank is a financial institution that assists individuals, corporations, and governments in raising financial capital by underwriting or acting as the client's agent in the issuance of securities (or both).
Capital Market is divided into two division; Primary Market and Secondary Market. Primary Market and its components are briefly described in this presentation.
this is a presentation on an introduction to investment banking highlighting the key functions of an investment bank, comparing commercial bank and Investment Bank, highlighting the organizational structure of Investment banks, and Investment banking scenario in india.
Capital Market is divided into two division; Primary Market and Secondary Market. Primary Market and its components are briefly described in this presentation.
this is a presentation on an introduction to investment banking highlighting the key functions of an investment bank, comparing commercial bank and Investment Bank, highlighting the organizational structure of Investment banks, and Investment banking scenario in india.
Le firme possono raccogliere fondi da molte fonti con svariati strumenti
La politica finanziaria di una firma determina la sua struttura di capitale e pertanto il mix di strumenti finanziari usati per finanziare l’impresa
In primo luogo, le ditte possono raccogliere capitale trattenendo gli utili generati dalle loro operazioni Capitale Interno che può risultare insufficiente per soddisfare il fabbisogno di capitale
Una volta determinato il Capitale Esterno necessario, la firma deve avere accesso ai Mercati di Capitale: mercati di debito e mercati azionari, Debt vs Equity
I diritti dei creditori hanno priorità sui diritti degli azionisti debt claims are senior over equity claims
Inoltre, I pagamenti verso i creditori sono fiscalmente deducibili da cui il noto scudo fiscale degli interessi sul debito
There are many ways a company can go public on the equities markets. Learn the difference between a traditional IPO and APO (alternative public offering) from Charms Investments.
This presentation, created by Syed Faiz ul Hassan, explores the profound influence of media on public perception and behavior. It delves into the evolution of media from oral traditions to modern digital and social media platforms. Key topics include the role of media in information propagation, socialization, crisis awareness, globalization, and education. The presentation also examines media influence through agenda setting, propaganda, and manipulative techniques used by advertisers and marketers. Furthermore, it highlights the impact of surveillance enabled by media technologies on personal behavior and preferences. Through this comprehensive overview, the presentation aims to shed light on how media shapes collective consciousness and public opinion.
This presentation by Morris Kleiner (University of Minnesota), was made during the discussion “Competition and Regulation in Professions and Occupations” held at the Working Party No. 2 on Competition and Regulation on 10 June 2024. More papers and presentations on the topic can be found out at oe.cd/crps.
This presentation was uploaded with the author’s consent.
Acorn Recovery: Restore IT infra within minutesIP ServerOne
Introducing Acorn Recovery as a Service, a simple, fast, and secure managed disaster recovery (DRaaS) by IP ServerOne. A DR solution that helps restore your IT infra within minutes.
Sharpen existing tools or get a new toolbox? Contemporary cluster initiatives...Orkestra
UIIN Conference, Madrid, 27-29 May 2024
James Wilson, Orkestra and Deusto Business School
Emily Wise, Lund University
Madeline Smith, The Glasgow School of Art
Have you ever wondered how search works while visiting an e-commerce site, internal website, or searching through other types of online resources? Look no further than this informative session on the ways that taxonomies help end-users navigate the internet! Hear from taxonomists and other information professionals who have first-hand experience creating and working with taxonomies that aid in navigation, search, and discovery across a range of disciplines.
0x01 - Newton's Third Law: Static vs. Dynamic AbusersOWASP Beja
f you offer a service on the web, odds are that someone will abuse it. Be it an API, a SaaS, a PaaS, or even a static website, someone somewhere will try to figure out a way to use it to their own needs. In this talk we'll compare measures that are effective against static attackers and how to battle a dynamic attacker who adapts to your counter-measures.
About the Speaker
===============
Diogo Sousa, Engineering Manager @ Canonical
An opinionated individual with an interest in cryptography and its intersection with secure software development.
Obesity causes and management and associated medical conditions
Investment Banking
1.
2. What is Investment Banking?
An investment bank is a financial institution that raises
capital, trades securities and manages corporate mergers and
acquisitions.
In brief:
• Investment Banking tries to match people who have
money to those that need money
• Acts as a middleman by facilitating the flow of savings
from those economic units that want to invest to those
units that want to raise funds.
3. • Corporations
• Governments
• Municipalities
Providers of
Capital
Investment
Banking
Chinese Wall
Sales & Trading
Research
Capital Need
Investment Banking
Sell sideBuy side
5. Examples “Buy side”
Suppose an investor wants to purchase 100 shares of company X.
They can solicit the services of an investment bank, where a
stock broker can place an order and deliver these shares.
INVESTMENT
BANKER
6. Examples “Sell side”
Suppose company X plans to raise capital by issuing new shares
of stock in an initial public offering (IPO) , X can solicit an
investment bank to underwrite the shares, market and sell
them to their clients.
8. What Does An Investment Banker Do?
STARTS
Idea Generation & Problem
Solving
• Strategic Alternatives
• Raising Capital
• Capital Structure Optimization
• Risk Management, Dividend Policy
Client Relationship
Management
• Ongoing dialogue on financial
markets, industry developments,
new products
• Long-term relationship as advisor to
Senior Management and Boards
Opportunities Assessment
ACTIONS
Financial Analysis
Communication
• Management, Board of
Directors
• Internal Committees
Potential Investors
Identification
Negotiation /
Structuring
Transactions
Due Diligence
Documentation
10. Overview of the IB Industry US
(2013)
Market Share
- J.P. Morgan Chase & Co. - 12.4%
- Bank of America Corporation – 9.6%
Annual
Growth
13-18
3.2%
Revenue
$149.5bn
Annual
Growth
08-13
2.8%
Market Share
- The Goldman Sachs Grp - 9.4%
- Morgan Stanley – 7.2%
- Citigroup Inc. – 5.9%
Wages
$33.9bn
Profit
$22.3bn
Businesses
9,049
11. Top IB Players in US
54%
20%
16%
10%
Products & Services Segmentation
Trading & Related Services
Corporate Finance Services
Underwriting Securities ( Equity and Debt )
Financial Advisory Services
12. Structure of an Investment Bank
Research department
enables the bank as well as
its clients to take informed
decisions
Capital markets trading and
investment
responsible for all investments into
the securities markets
Corporate finance department
caters to the funding requirements of a company
FRONT OFFICE
- Raise Capital
- Sales & Trading
- Research
MIDDLE OFFICE
- Risk Management
- Financial Control
- Corporate
Treasury. Strategy
and Compliance
BACK OFFICE
- Operations
- Technology
13. Revenue sources of the Investment
Banks
• Charged for advice, providing finance, keeping money
available for clients, trading services, investment
services, and research
Fees
• Income from investments made in sharesDividends
• Income from loans madeInterest
• Profits from investments madeInvestments
• Profit made from buying and selling securitiesTrading
19. Why Do Mergers And Acquisitions
Occur?
Creating Value
• Increasing market power
• Synergy
• Growth
• Acquiring unique capabilities or resources
• Unlocking hidden value
Cross-Border
Mergers
• Overcoming adverse government policy
• Exploiting market imperfections
• Product differentiation
• Technology transfer
• Following clients
Dubious Motives
• Tax considerations
• Diversification
• Bootstrapping earnings
• Managers’ personal incentives
20. Example Of A Merger: AMR And
U.S. Airways
• U.S. Airways
proposes
merger to
bankrupt
AMR.
April 2012
• AMR creditors
encourage AMR to
merge with another
airline, instead of
emerging from
bankruptcy alone.
July 2012
• AMR and U.S.
Airways begin
merger
discussions.
September
2012
• U.S. Airways proposes
merger, with its
shareholders owning
30% of the new
company.
November
2012
• Details of the
merger are
worked out.
• Merger filed
with the FTC
under Hart-
Scott-Rodino
Act.
February
2013
21. M&A: Synergy
Synergy occurs when the whole is greater than sum of its parts.
For example, in terms of math it could be represented as
“2+2=3” or as “2+2=5”.
In the context of mergers, there can be two types of synergy:
The first type of synergy results in economies of scale, which
refers to decreased costs ( Cost synergy)
Another type of synergy results in increased revenues such
as cross-selling (Revenue Synergy)
22. Example: Bootstrapping earnings
Company One Company Two
Company One
Post-Acquisition
Earnings $100 million $50 million $150 million
Number of shares 100 million 50 million 125 million
Earnings per share $1 $1 $1.20
P/E 20 10 20
Price per share $20 $10 $24
Market value of stock $2,000 million $500 million $3,000 million
22
Assumptions:
• Exchange ratio: One share of Company One for two shares of Company Two
• Market applies pre-merger P/E of Company One to post-merger earnings
Bootstrapping earnings is the increase in earnings per share as
a result of a merger, combined with the market’s use of the
pre-merger P/E to value post-merger EPS.
24. Advisory Services
Business Planning
These include sharpening value
proposition, definition of markets/
industry/ customer, financial
projections, milestones and risk
planning and creating a business
plan document.
Intellectual Property &
Technology Commercialization
These include preliminary
patentability analysis, IP
landscapes, IP portfolio analytics
& planning, basic IP knowhow &
infringement issues, etc.
Nuts-and-Bolts of Company
Creation and Management
These include company
incorporation, financial &
accounting setup, HR processes,
import/export basics, regulatory
requirements, etc.
Science & Technology
These include technology road-
maps, strategy creation & due
diligence; with an emphasis on
chemical, materials and biological
sciences; instrumentation,
scientific software, informatics,
and scientific services.
Fund Raising
These include planning &
matching start-up capital
requirements with appropriate
sources of funding; ranging from
governmental agencies (e.g..
DST, MoMSME) to HNIs/angels
and professional investors such
as venture capital firms.
Market and Industry Insights
In specific domains, Venture
Center can provide insights into
specific markets or industry
segments in India.
Broad Services under this :
26. Primary Market/Secondary Market
Primary Market
(Newly Issued
Securities)
Raise New Capital for the
corporate
IB’s create a public
market for their client’s
securities
Secondary Market
(Previously Issued
Securities)
Market makers facilitate trading
of old securities
Trades through agency : e.g.
broker operating through an
exchange like NYSE
Trades through principal
transactions
27. Raise Capital
There are several ways in which firm can raise capital in the public market:
• Private corporate
issues public
traded shares for
the first time
Initial Public
Offering
• Existing public
firm issues new
shares again in
the market
Seasoned Equity
Offering
• Corporate issues
shares in a
subsidiary to the
public
Carve Out
• Corporate issues
all subsidiary
shares to their
current
shareholders
Spin Off
• Debt Issuances :
Coporate Bonds
Fixed
Income
• Share offered
directly to public
shareholders
Direct Public
Offering
28. Raise Capital
Firms can skip going public by going to private market:
Going to Large Investors :
Insurance Companies
Wealthy Individuals
Mutual Funds
Other Corporate, etc.
Private Placement can be below the Market Price
Easier to renegotiate than public issues
29. Underwriting
Definition of 'Underwriting‘
The process by which investment bankers raise investment
capital from investors on behalf of corporations and
governments that are issuing securities (both equity and
debt).
The process of guaranteeing the placement of new debt or
equity with public financial markets
30. Securities Underwriting :
The IPO Process
Firm Selects an
Underwriter ( Investment
Bank) and agree on the
offering method
Valuing the
Offer
- SEC Filing
- Syndication
- Road-show
- Offer
- Quiet
Period
Fees of IB
31. Example of Securities Underwriting
Gillette wants to
raise some money
for a new project
through issue of
new stock
JPMorgan will then
underwrite the offering.
It will use its institutional
sales force to go out and
get Fidelity and many
other institutional
investors to buy chunks
of shares from the
offering.
JPMorgan’s traders
will facilitate the
buying & selling of
these new shares by
buying and selling
Gillette shares out of
their own account,
thereby making a
market.
JPMorgan will pay
Gillette proceeds
at $(share price *
newly issued
shares) less
JPMorgan’s fees.
32. Leverage
Definition of 'Leverage‘
The use of various financial instruments or borrowed capital, such
as margin, to increase the potential return of an investment
The amount of debt used to finance a firm's assets. A firm with
significantly more debt than equity is considered to be highly
leveraged
Leverage is most
commonly used in real
estate transactions
through the use of
mortgages to purchase a
home.
33. Example Explaining Leverage
Particulars Company One Company Two
Equity Share Capital
($100/share)
$100 million $50 million
5% Debentures - $50 million
CALCULATION OF EPS/SHARE:
Particulars Company One Company Two
EBIT $10 million $10 million
Less: Interest - $2.5 million
PBT $10 million $7.5 million
Less: Taxes (50%) $5 million $3.75 million
PAT $5 million $3.75 million
No. of Shares 1 million 0.5 million
EPS/Share $5 $7.5
CAPITAL STRUCTURE:
35. Bonds
Definition of 'Bond'
A debt investment in which an investor
loans money to an entity (corporate or
governmental) that borrows the funds for
a defined period of time at a fixed interest
rate
Bonds are used by companies,
municipalities, states and U.S. foreign
governments to finance a variety of
projects and activities
Bonds are commonly referred to as fixed-
income securities and are one of the three
main asset classes, along with stocks and
cash equivalents
36. Types of Bond
1. US Government Bonds (Treasuries)
2. Agency Bonds (Agencies)
3. Municipal Bonds (Munis)
4. Corporate Bonds (Corporates)
Broad classification of Bonds on the basis of Interest:
Fixed rate
bonds
• Pays a fixed rate of
interest (the coupon
rate) for the life of
the bond
Floating rate
bonds
• Interest payments
that are tied to some
measure of current
interest rates. A
common measure is
the 90 day bank bill
swap rate or BBSW
Indexed
bonds
• Interest is usually
paid at a fixed rate
on the adjusted face
value. They are
generally medium to
long-term bonds
37. Bond Market
Domestic Bond Market: Bonds issued locally by domestic
borrower usually in domestic currency
Example: General Motors issues a bond in the U.S. for placement
in the U.S. domestic market, that is, to investors residing in the
U.S.
Foreign Bond Market: Bonds issued in local market by foreign
borrowers, usually issued in local currency
Example: Korea electric, a foreign corporation, issues bonds in
the US for placement in US alone.
The issue is denominated in the currency of the intended
investors, US$.
38. Euro Bonds: Bond denominated in a currency not native to
the issuer’s home country. Eurobonds are commonly issued
by governments, corporations, and international
organizations.
Example: Company XYZ is headquartered in the United States.
Company XYZ decides to go to Australia to issue
bonds denominated in Canadian dollars.
Bond Market
39. Future of Investment Banking Firms
Investment banking has always been a cyclical business. The ‘old
ways’ of doing business need to change. Here are just a few of the
trends affecting the industry:
Find new ways to connect with
customers
Improve their abilities to effectively manage
and leverage data, including their analytics
and predictive modelling capabilities
Industrialize their internal processes
40. Future of Investment Banking Firms
Step up use of cloud and other
emerging technology
Re-examine merger and acquisition
opportunities
Rebuild their reputations
http://www.jobsearchdigest.com/investment_banking_jobs/career_advice/overview_of_the_investment_banking_industry/
Or
Fees or commission earned through the placement of equity and debt on behalf of their clients, which may include large institutions, companies, hedge funds and wealthy individuals.
By providing strategic advisory services for mergers, acquisitions or divestitures as well as other financial services, such as the trading of derivatives, fixed income, foreign exchange (forex), commodities, and equity securities.
Motives for Merger
Creating value (that is, mergers with these motives have the potential to add value):
Synergy (Note: 1 + 1 > 2)
Economies of scale
Cross-product selling
Growth
External growth (may be less risky than organic growth)
Increasing market power
Horizontal or vertical integration to increase strength in the industry
Note: Regulatory authorities in some countries may limit this as a benefit (e.g., FTC in the United States).
Acquiring unique capabilities or resources
Resources include patents, technology, trademarks, or raw materials
Unlocking hidden value
Improve management, reorganize structure, breakups, or liquidations
Cross-border mergers:
Exploiting market imperfections
Cheaper labor in one market
Lower-cost raw materials
Overcoming adverse government policy
Circumvent tariffs
Circumvent barriers to trade
Technology transfer
Facilitate entry into a country’s market
Gain access to new technology or resources
Product differentiation
Enhance product line
Expand into a country’s market
“Buy” reputation for entry into a market
Following clients
Make sure that the business of clients do not go to another company once the client expands to another country.
Dubious motives:
Diversification
Investors can diversify in their own portfolios, so there is generally no value to companies to diversify.
Bootstrapping earnings (see Example 10-3)
Occurs if the acquirer’s shares trade at a higher P/E than the targets
Managers’ personal incentives
Compensation (often tied to size of the firm/earnings—part of managerialism theories)
Decrease their personal employment risk
Tax considerations
Most jurisdictions do not allow “buying” tax losses.
Explain how earnings per share (EPS) bootstrapping works and calculate a company’s post-merger EPS.
Example: Bootstrapping Earnings
Bootstrapping earnings is the increase in earnings per share as a result of a merger, combined with the market’s use of the pre-merger P/E to value post-merger EPS.
In this example, we first assume that the market is imperfect and incorrectly applies the pre-merger P/E of Company One to the merged company.