Markis Capital Seminars: Introduction to Investment Banking

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Taught in Mandarin Chinese, Seminar held on 2013 Sep 26
瑪亞學院 系列講座
解密投資銀行
瑪亞投資有限公司

1. 投資銀行組織 2. 投資銀行功能 3. 投資銀行工作範圍 投資銀行工作範圍 4. 投資銀行業務分水嶺

Published in: Economy & Finance, Business

Markis Capital Seminars: Introduction to Investment Banking

  1. 1. 2013 瑪亞學院 系列講座 Introduction to Investment Banking 解密投資銀行 蔡鴻德執行長 瑪亞投資有限公司 Markis Capital Limited
  2. 2. What is Investment Banking? 2 Giving Advice Raising Capital
  3. 3. 台灣有哪些外資投行? 你認識幾家?
  4. 4. 台灣金控體系 – ex. Fubon FHC 4 Source: Fubon FHC IR Presentation
  5. 5. 台灣金控體系 – ex. Fubon Securities 5 Source: Fubon FHC IR Presentation
  6. 6. Financial Services Landscape 6 Commercial Bank Custody Lending Operations Asset Management (Buy-Side) Investment Bank (Sell-Side) Merchant Banking Insurance Investment Team Global Research Private Equity Investment Team Operations Sales & Trading (Markets) Venture Capital Distribution Investment Banking Operations
  7. 7. Front, Middle, Back Office 7 Front Office • Investment Banking • Markets • Sales & Trading • Research • Private Wealth Management Middle Office • Risk Management • Compliance • Operational Risk analysis Back Office • • • • Operations Technology HR / Training Finance / Treasury / Audit
  8. 8. 常見的前台工作機會  Equity Research   Research Analyst, Research Associate/Assistant Sales & Trading Research sales, sales trader, dealer, dealer assistant  Corporate access, desk analyst   IBD: Corporate Finance, Advisory  PWM: Private Wealth Management
  9. 9. The "Culture" of I-Banking 9      Bonus-oriented culture – "Total Comp" basis Prestige – Front office vs. back office, star analysts Challenge – "only the top candidates", long hours, BSD, "work hard, play hard" Fame – "advisor" to major companies, front page transactions, In-the-know, on the inside. "Benefits" – global travel, overtime meals, overtime taxi, training & development, etc.
  10. 10. The Chinese Wall 10 Chinese Wall Strategic advisory Securities underwriting Users of capital Investment Banking Sales & Trading Research •Corporations •Governments •Municipalities Private side Public side Providers of Capital •Individuals •Pension Funds •Insurance Companies •Asset Managers •Corporate Treasuries •Sovereign Wealth Funds
  11. 11. 11 Corporate Finance
  12. 12. Basic Structure 12 Investment Bank (Sell-Side) Global Research Sales & Trading (Markets) Investment Banking Operations Economics & Investment Strategy Equities Capital markets IT Fixed Income Research Fixed Income Advisory Compliance Equity Research Commodities HR Quantitative Research FX Legal
  13. 13. Overview of Investment Banking 13 Capital Markets Advisory Capital Markets o Equity capital-raising o Initial public offerings (IPOs) o Follow-on offerings o Equity-linked (convertible) o Debt capital-raising o High-grade or investment grade o High-yield o Syndicated loans o Tax-exempt o Mergers & Acquisitions o Buyside o Sellside o Spin-offs / Splitoffs / Carve-outs o Hostile defense o Hostile takeovers / proxy fights o Joint Ventures o Restructuring
  14. 14. Underwriting Process 14 Source: Financial Markets + Institutions (2006)
  15. 15. Corporate Finance Activities 15 Advisory Services on M&A, Foreign Exchange,Valuation, Financial Strategy, Issuing Debt and Equity, etc. Represent Companies for Sale        Value Company (Financial Models) Write Selling Memo Conduct Due Diligence Identify and Contact Buyers Create Management Presentation Negotiate with Buyers Close Transaction Represent Companies Buying Other Companies     Value Company (financial models) Conduct Due Diligence Draft terms and determine price offered Negotiate with Seller
  16. 16. Industry or Product Groups 16 Industry Groups         Consumer Products & Retail Energy and Power Financial Institutions Healthcare Global Industrial Group Real Estate Technology/Media/Telecom Transportation & Services Product Groups         Debt Capital Markets Group Equity Capital Markets Group Equity Corporate Finance Team Financial Sponsors Leveraged Finance Global Syndicated Finance Mergers & Acquisitions Private Equity Placement Group
  17. 17. Investment Banking – Corporate Titles 17 Managing Director Executive Director Director Associate Director/Associate Analyst
  18. 18. What Does An Investment Banker Do? 18 Origination  Client Relationship Management o Ongoing dialogue on financial markets, industry developments, new products o Long-term relationship as advisor to Senior Management and Boards  Idea Generation and Problem Solving o Strategic Alternatives o Capital Raising o Optimizing Capital Structure o Risk Management, Dividend Policy  Assessment Of Opportunities Execution  Financial Analysis  Communication o Management, Board of Directors o Internal Committees  Identify Potential Investors  Negotiation / Structuring Transactions  Due Diligence  Documentation
  19. 19. Banking Skill Sets 19  Financial Modeling – Intricate (LBOs, structuring) to simple (comps)  Writing/Presentations – Selling memos, management presentations, commitment memos, Roadshows, Prospectus (or other filings)  Research – Gathering data, understanding legal aspects, capital markets process & procedures  Communication & "Rain-making" – bringing in business, acts as the relationship manager and client expert.
  20. 20. 20
  21. 21. 21 Sales & Trading / Markets
  22. 22. Basic Structure 22 Investment Bank (Sell-Side) Global Research Sales & Trading (Markets) Investment Banking Operations Economics & Investment Strategy Equities Capital markets IT Fixed Income Research Fixed Income Advisory Compliance Equity Research Commodities HR Quantitative Research FX Legal
  23. 23. 外資 Sales & Trading 在台灣 架構 23 Foreign Institutional Investors (FINI) Broker Custodian
  24. 24. 本國 vs. 外資券商的經營模式 本國 vs.外資券商      Client Type Business Scope Product Range Risk Control Culture 外資券商優勢      Research Scope Perspective Global Resources Internal Control Access to FINI
  25. 25. Securities Firm – Market Share 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 證券商 Aug-13 元大寶來 凱基 永豐金 富邦 群益 元富 瑞士信貸 日盛 台灣摩根士丹利 統一 兆豐 華南永昌 瑞銀 國票 美林 港商德意志 高盛亞洲 第一金 玉山 摩根大通 國泰 康和 新光 港商麥格理 花旗環球 百分比 % 13.184 8.573 5.208 5.205 4.960 3.583 3.413 3.385 3.275 3.117 3.039 2.725 2.279 2.070 1.851 1.802 1.780 1.631 1.475 1.341 1.335 1.271 1.173 1.165 1.162 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 證券商 Aug-13 臺銀 東方匯理 宏遠 中國信託 香港商野村 大眾 合庫 大慶 香港上海匯豐 法銀巴黎 大昌 台灣工銀 港商法國興業 亞東 台灣企銀 土銀 大和國泰 台灣巴克萊資本 致和 鑫豐 台新 渣打商銀 德信 永興 高橋 百分比 % 1.102 0.951 0.877 0.818 0.739 0.735 0.631 0.582 0.508 0.492 0.450 0.449 0.443 0.406 0.387 0.320 0.313 0.306 0.298 0.277 0.258 0.246 0.225 0.184 0.182
  26. 26. 直接金融:前台架構 26 證券公司 資產管理公司 Head of Equity/FX/Fixed Income 研究部 Head of Research 業務部 Chief Investment Officer 交易室 投資研究部 Head of Sales Sales Analysts Sales Traders Dealers Sales Traders Fund Manager Dealers 開單 開單 建議 股票 Analysts
  27. 27. Tools of a Trader (I'm kidding) 27
  28. 28. Example: Commodities Org Chart Commodities Trading    Sales  Proprietary Trading Market making Desk analysts   Investor Corporate Light structuring Structuring Origination  Product design   Complex structuring  Physical deals Private transactions Research    Fundamental analysis Price forecasts Product design Others      IBK    M&A Strategic investments Strategic divestments Investor Sales DCM, ECM   Origination Financing    Hedge Funds Institutional Clients Retail clients  Cash Derivatives Equity Fixed Income  Credit    Corporate Sales   Flow Hedging Public Sector  Budget Hedging Mid office Back office Credit Legal Compliance Others  Prime Brokerage  Futures and Options … 
  29. 29. 直接金融: Sell Side 29  證券公司 Head of Equity/FX/Fixed Income 研究部 Head of Research 業務部  Head of Sales  Sales Analysts Sales Traders Dealers  分析師:分析產業趨勢及公 司營運狀況,提供投資建議 給Buy Side分析師 業務員:提供基金經理人整 個市場的看法 交易業務員:視消息面、籌 碼面、技術面變化提供短線 操作建議給Buy Side的Sales Traders 交易員:收到來自Buy Side的 下單,判斷股價走勢,以低 買高賣為原則,分次丟單
  30. 30. 直接金融: Buy Side 30     分析師:分析產業及公司基本 面,與Sell Side分析師交換意見, 出具報告,提供買賣建議給基 金經理人 基金經理人:基金操盤人,接 受建議與報告後開單到交易室 作進出 短線交易業務員:追蹤消息面、 籌碼面、技術面變化,下單到 交易室作進出 交易員:判斷大盤走勢,決定 何時下單 資產管理公司 Chief Investment Officer 交易室 Sales Traders Dealers 投資研究部 Fund Manager Analysts
  31. 31. 投信/各類 基金經理人 31
  32. 32. 32
  33. 33. 33 Breadth of Hedge Fund Investment Strategies Sector (Total) 4.77% Short Selling 0.30% Relative Value Arbitrage 11.80% Convertible Arbitrage 3.32% Distressed Securities 4.70% Regulation D 0.24% Emerging Markets (Total) 4.03% Merger Arbitrage 1.40% Market Timing 0.37% Macro 10.68% Equity Hedge 30.02% FI: MBS 2.63% FI: High Yield 0.79% FI: Diversified 1.78% FI: Convertible Bonds 0.08% Equity Market Neutral 2.23% FI: Arbitrage 2.57% Event-Driven 13.77% Equity Non-Hedge 4.51%
  34. 34. 34 Equity Research
  35. 35. Basic Structure 35 Investment Bank (Sell-Side) Global Research Sales & Trading (Markets) Investment Banking Operations Economics & Investment Strategy Equities Capital markets IT Fixed Income Research Fixed Income Advisory Compliance Equity Research Commodities HR Quantitative Research FX Legal
  36. 36. 影響股票價值之因素 市場現 況 投資人 對公司 的看法 每股資 產淨值 企業價值 現金流 個股新 量 聞 營收,利潤, 未來發展 36
  37. 37. The Role of Research 37 公司 股票流動性↑使公 司股價上升,籌資 成本降低。 投資人 提高透明度, 增加資訊之提 供 投資分析師 Sell-side 分析報告多,增加預測正 確性
  38. 38. 外資研究報告的迷思 38        外資研究報告 ≠ 買賣超 外資研究報告 ≠ 預見未來 外資研究報告 ≠ 實際操作 媒體及社會大眾 ≠ 客戶 目標價 = 預測值 外資研究報告 = 參考資料 外資研究部 = 研究合規 (Reg AC, Reg FD, etc.)
  39. 39. 39
  40. 40. Equity Research Methodology 40 1. Review Public Information 2. Conversations w/ company management for detailed information 3. Prepare 3-yr Prelim Earnings Model 4. Review Financial Assumptions 5. Assessment 6. Finalize Earnings Model
  41. 41. Minimum initiation requirements 41       Company description 5-year P&L, cash flow, balance sheet (2-3 years forecast) Most recent results, commentary Risks Rating, price target Compliance – analyst certification (Reg AC), editorial, compliance review, restricted list
  42. 42. Report Submission Process 42 1. 2. 3. 4. 5. 6. Submit initiation form Upload model Draft report Research Recommendation Committee (RRC) Editorial Compliance
  43. 43. Valuation Considerations 43    10-15 year projection, PV versus current  Asset-Based Valuations  P/E, P/B, EV/EBITDA, Efficiency, Margins  private market values for firms individual units break divisions as standalone entities (sum of the parts) calculate relative value for each division  ratios vs. peers  company value (multiples history)  Arrive at blended valuation  High/low in cycle  Risk Assessment  current P/E justification  TP over 12 months  Valuation vs. TAIEX  Risk Ranking  P/E, P/BV, Div Yield, FCF Yield, EV/EBITDA, EV/Sales
  44. 44. Industry Analysis 44 1. Define Scope of Industry 2. Identify Key Players 3. Determine Size Metric to Use (Revenues, Market Cap, Net Income, Capacity, etc.) 4. Collect Annual Historical Data for Key Players 5. Forecast Growth for key players 6. Forecast TAM (Determine concentration ratio of key players) 7. Calculate CAGR 8. Check reasonableness of assumptions
  45. 45. 具備條件 45      英文聽說讀寫的重要性 具備基本金融財務分析知識 抗壓性強、積極、認真負責、謹慎細心 主動具企圖心 – 維持自己的好奇心 人際關係及溝通技巧 -訓練自己的表達能力
  46. 46. 46 Operations / Talent Development
  47. 47. 47
  48. 48. Competency Model 48 Strategic Thinking • Business Knowledge • Innovation and Creative Thinking Business Results • Execution • Analytical Ability People Leadership • Talent Building • Team Leadership • Collaboration Personal Effectiveness • • • • Communication Energy & Drive Decisiveness Character
  49. 49. 分析師成長的經歷 49 Star Analyst Research Analyst Research Associate • 基本面分析 Research Assistant • 收集資訊 • 資料整理 • 財務模型 • 市場意識 • 企業質詢 • 撰寫報告 • 推薦想法 • 行業知識 • 營業員盤問 • 建立企業關係 • 投資策略 • 路演活動 • 客戶關係 • 媒體關係 • 團隊培訓和指導
  50. 50. Training Curriculum Topics 50  New Hire Orientation - Company's Value, Principles & Leadership, brand and history, core businesses, global/regional structure  Managing Your Time  Developing your Personal Communication Style  Collaborative Negotiations  Performance Management  Mechanics of Business Writing / Presentation Skills  7 Habits of Highly Effective People (Steven Covey)  Financial Environment  Financial Skills – Intro to Corporate Finance, Market Data and Economics, Financial Analysis, Operational Risk, etc.  Product Knowledge – Derivatives, FI, Equities, Capital Markets, Valuation, etc.  Desktop Applications – Word, Excel, PowerPoint,  Research Applications - research website, analytics, report/model upload platform
  51. 51. Interesting Reading 51          Liar's Poker (1990) Michael Lewis Monkey Business: Swinging Through the Wall Street Jungle (2001) John Rolfe and Peter Troob The Predators' Ball: The Inside Story of Drexel Burnham and the Rise of the Junk Bond Raiders (1988) Connie Bruck Den of Thieves (1992) James B. Stewart The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance (1990 & republished 2010) Ron Chernow Best Practices for Equity Research Analysts: Essentials for Buy-Side and Sell-Side Analysts (2010) James J.Valentine 改變的勇氣:楊應超的首席人生 (2013) 投機到投資谷月涵股市基本分析 (2003) Periodicals: Institutional Investors, Asia Money, FinanceAsia, Bloomberg Markets, Bloomberg Businessweek, The Economist, Forbes, Fortune, Harvard Business Review,
  52. 52. Movies 52           Trading Places (1983) - Comedy Wall Street (1987) Barbarians at the Gate (1993) Boiler Room (2000) Capitalism: A Love Story (2009) – documentary Inside Job (2010) - documentary Wall Street: Money Never Sleeps (2010) Margin Call (2011) Too Big to Fail (2011) Arbitrage (2012)
  53. 53. Online Resources 53        http://www.opalesque.com/ - About Hedge Funds http://www.wallstreetoasis.com/ - Wall street forum http://www.mergersandinquisitions.com/ - another blog http://www.efinancialcareers.hk/ - Job Website http://chandoo.org/wp/ - Excel modeling tips http://www.careers-in-finance.com/ - Career website http://www.cfasociety.org/taiwan/Pages/default.aspx - CFA
  54. 54. Q&A 蔡鴻德 (Teddy H. Tsai) 董事暨執行長 (Director & CEO) 54 801 高雄市前金區大同二路20號9樓之2 電話: +886-7-241-2329 分機 123 手機: 0910723698 電子郵件: teddy.tsai@markis.tw 網站: http://www.markis.tw

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