“Morgan Stanley offers $200,000 to IIM student for Investment Banking role!” reads a newspaper article. What is investment banking certification.
(familiarly called ‘I-banking’), and why is it so ‘hot’??
Lots of people think, given the name, that I-banking means to manage the investments of clients. Not so! Investment banking courses, firstly, is a service offered to a business, not an individual. Secondly, it is to do with raising funds for the business, not investing it.
Also, since this is a pure Advisory service, any one – not just a bank – can offer ‘I banking’. You have a 1-2 people firms to large multinationals such as Goldman Sachs.
The two main businesses of I-banking are:
• Merchant Banking or Issue Management
• Mergers and Acquisitions
Merchant Banking or Issue Management, is the Advisory service offered to companies, helping them with raising funds in the financial markets. You will have heard of an Initial Public Offering, or IPO, when a company is offering its shares to the public, for the first time. A Merchant Banker will be advising the company throughout the process.
Mergers & Acquisitions, also called M&A, is the more glamorous I banking service. Here, an Investment Banker advises companies which are either buying other companies or being bought themselves.
For example, when Crisil recently bought Pragmatix Services, for about USD 8.5 Mn, both parties would have hired an I banker ; who would charge a fee, which is a percentage (2-3%, usually) of the deal value.
Another type of I banking service gaining popularity is Venture Capital & Private Equity (PE) funding. Here, a fund invests in a company, by buying some of its shares. VC funds invest in established startups, while PE funds in mature companies. People working in such funds, are also called ‘I bankers’.
Now that we understand what I banking is , let us see, what are the entry level roles and what courses, will prepare us for them.
Given the above, here are the most popular ones:
1. NCFM certifications, offered by the National Stock Exchange are easy to clear and cost ~ Rs. 1700 only. You download a pdf, look at the sample question paper, and write the certification exam. They have one on Mergers & Acquisitions. National Stock Exchange of India Ltd. Here, the learning you get, is limited to the pdf.
2. FLIP Certifications are growing in popularity and are the choice of thousands of B schoolers. They are very practical – their online course on Private Equity, M&A, is developed by a senior IIM alumnus working in an American PE firm. After completing the detailed online course, you can write their certification exam. They’re not as easy to clear, and the cost will be Rs. 8–10,000 inclusive of the online learning and the testing fee. This possibly will help you more in actual interviews and job situations.
Flip provides online Investment banking courses through interactive e-learning programs with courses written by senior industry professionals.