Investment banking is a segment of banking operations. It facilitates the individuals or the organizations to raise capital and acquire financial consultancy services. It acts as the intermediary between the investors and the security issuers.
In the process, they either buy shares at a price estimated by experts, resell them to the public or sell shares on behalf of the issuer. They earn a commission on each share. Investment banking serves different purposes and business entities. A few of them are:
- Financial services such as proprietary trading or trading securities for their accounts
- Help organizations in mergers and acquisitions
- Leverage finance, lend money to firms to buy assets and settle acquisitions
- Improve companies’ structure and help to maximize profit
- Enable new firms to go public
- Provide support services like market making, trading of equity securities, derivatives and Fixed income instruments, currencies, and, commodities (FICC) services
As an industry, investment banking market is categorized as bulge market (upper-tier), middle market (mid-level businesses), and, boutique market (specialized businesses)
Further, all investment banking activities are classified under two categories, either ‘sell-side’ or ‘buy-side’.
Sell-side: It involves trading securities for cash or promotion of securities. It includes facilitating transactions, market-making, underwriting, or research.
Buy-side: It involves advisory services to institutions that buy investment services. It includes private equity funds, mutual funds, unit trusts, hedge funds, life insurance companies.
In brief, an investment banking professional’s day completes with research, client sourcing, and guiding people/company on their investment plans.
A career in investment banking is exciting and challenging. If the above note on investment banking inspires you to plunge into the career of investment banking, let us move forward and know how to proceed further.
Though different educational backgrounds are acceptable, a substantial foundation in mathematics is important. To be an investment banker, you must be a graduate in finance, accounts, economics, or mathematics. Having a post-graduation in business administration is more prevalent in this profession. Apart from this, an investment banking certification helps you quick-start your career.
Investment banking certification
Apart from your formal education, an investment banking certification from a recognized institution or certifying body is recommended.
A certification helps you gain professional specialization in the field. It imparts field knowledge related to subjects like Asset class valuations, corporate finance, basics on investment banking, financial statement analysis, and, etc.
It enhances your skills in financial modelling, business valuation, presentations, pitch books, relationship management, transaction documents, sales, business development, and negotiation.
Importance of certification program
As mentioned earlier, the certification programs in investment banking provide the candidate with expert knowledge about the subject. It carries high perks and rewards, gives a competitive advantage in the industry, gives credibility for the acquired skills, and validates competency in finding valuations
In brief, the certifications help you build a systematic approach in finding value for making investment-related decisions. The deals include Initial Public Offering (IPO), Mergers and Acquisition, Leveraged Buy-outs, and others.
A Final Note
Certification gives you practical knowledge and enhances your skill in investment banking. Earning a certification helps you climb the career ladder at a faster rate.