Role/Job Description of the Investment Banker

Vinutha Raju | October 21,2013 02:30 pm IST

Investment banking firm is involved with raising funds for company or conducting merger and acquisition for a company.
 

Raising of funds: Raising of funds could be either through debt or equity.


I. Debt is raised from banks, financial institutions and foreign financial institution. Investment banker’s job (for raising debt) will include:

 

a. Finance team
1. Understanding of the project for which funds are raised.
2. Due diligence of business and financial statements.
3. Preparation of business plan.
4. Preparation of project report which will include financial analysis, financial modelling and funds allocation.
5. Repayment schedule along with the estimated financial statements.
 

b. Marketing team
1. Contact banks, financial institutions and foreign financial institution.
2. Present the company’s case.
3. Answer all the queries of the bankers.
4. Raise the loan at best possible terms on behalf of the company.
 

II. Equity capital is raised through private placement, private equity or IPO.
a. Private placement is raised through HNI (High net-worth individual) or financial institution.
b. Equity capital is raised through Private equity firms. Private equity firms have capital which is invested in companies of their preferred sectors.
c. IPO is raising funds from the public. Investment banker’s job (for raising equity) will include:
 

a. Finance team
1. Understanding of the project for which funds are raised.
2. Meet the promoters/senior management team and understand the business and their requirement.
3. Due diligence of business and financial statements.
4. Preparation of business plan.
5. Preparation of project report which will include financial analysis, financial modelling and funds allocation.
6. Valuation analysis and determining the enterprise value.
 

b. Marketing team:
1. Contact HNIs, Private equity firms.
2. Present the company’s case.
3. Answer all the queries of the prospective investors.
4. Take the prospective investors for on site evaluation.
5. Get the suitable term sheet from the investors.
 

III. Raising capital through IPO: Raising capital from public requires lots of experience as it entails much more compliance and dealing with larger and distributed market. But the basic background remains the same as raising of equity or debt.
 

a. Finance team
1. Understanding of the project for which funds are raised.
2. Meet the promoters/senior management team and understand the business and their requirement.
3. Due diligence of business and financial statements.
4. Preparation of business plan.
5. Preparation of project report which will include financial analysis, financial modelling and funds allocation.
6. Valuation analysis and determining the enterprise value.
7. Preparation of detailed prospectus. (Prospectus includes very detailed history of the company, present performance of the company, financial statements for the past 5 years, capital structure, key people, future prospects etc.)
 

b. Marketing team:
1. Interact with finance team and legal team to prepare appropriate documents to obtain all permissions and compliance.
2. Obtain SEBI permission.
3. File prospectus.
4. Contact and get underwriters on board.
5. Tie-up with brokers to market the issue.
6. Tie-up with bankers to collect application money
 

IV: Merger and acquisition: This could be initiated from either of the parties, companies which is scouting to acquire a company or a company which wants to be acquired. In some rare cases, the whole acquisition and merger could be planned and executed by the investment banker. Very snior and experienced team conducts this operation.
 

a. Finance team
1. Meet the promoters/senior management team and understand the business and their requirement.
2. Due diligence of business and financial statements.
3. Preparation of financial analysis of targeted company for acquisition/merger.
4. Preparation of project report which will include financial analysis, financial modelling of the merged entity.
5. Valuation analysis and determining the enterprise value.
 

b. Marketing team
1. Identifying the targeted company.
2. Contact the promoter/senior management team of the targeted company.
3. Present the proposal.
4. Conduct detailed discussion and answer all queries.
5. Get the senior teams of both the companies meet.
Concluded.. 

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Vinutha Raju has over 18 years of experience in investments, financial research & analysis and worked as Vice President-Investments with a mid-sized private equity fund. She was on the board of directors in the invested companies. She is a member of board of studies for setting  of syllabi for finanace courses in MBA colleges. She has a...