Investment Banking
UNIVERSITY OF MUMBAI PROJECT ON “FUNDAMNETAL
ANALYSIS OF INVESTMENT BANKING”
SUBMITTED BY AKASH DEVRAJ GUPTA
PROJECT GUIDE PROF. ESWARI BACHELOR OF MANAGEMENT STUDIES SEMESTER V (2017-2018)
SHRI CHINAI COLLEGE OF COMMERCE AND ECONOMICS ANDHERI (E), MUMBAI - 400069.
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Investment Banking
DECLARATION I, AKASH DEVRAJ GUPTA student of SHRI CHINAI COLLEGE OF COMMERCE AND ECONOMICS , of T.Y.B.B.I. (Semester V) hereby declare that I have completed this project on “ FUNDAMENTAL ANALYSIS academic year 2017 – 2018. 2018. The OF INVESTMENT BANKING ” during the academic information submitted is true and original to the best of my knowledge. DATE:-------------------
--------------------------SIGNATURE OF STUDENT
CERTIFICATE I , Prof .---------------------------,Here by certify that Miss/Mr----------------------------,student of TYBMS( SEM V) ,Academic year 2017-2018,has successfully completed the project on----------------------------------under my Guidance.
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Signature of project guide
Signature of Principle
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SIGNATURE OF EXTERNAL EXAMINER
SIGNATURE OF CO-ORDINATOR
COLLEGE SEAL
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DECLARATION I, AKASH DEVRAJ GUPTA student of SHRI CHINAI COLLEGE OF COMMERCE AND ECONOMICS , of T.Y.B.B.I. (Semester V) hereby declare that I have completed this project on “ FUNDAMENTAL ANALYSIS academic year 2017 – 2018. 2018. The OF INVESTMENT BANKING ” during the academic information submitted is true and original to the best of my knowledge. DATE:-------------------
--------------------------SIGNATURE OF STUDENT
CERTIFICATE I , Prof .---------------------------,Here by certify that Miss/Mr----------------------------,student of TYBMS( SEM V) ,Academic year 2017-2018,has successfully completed the project on----------------------------------under my Guidance.
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Signature of project guide
Signature of Principle
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SIGNATURE OF EXTERNAL EXAMINER
SIGNATURE OF CO-ORDINATOR
COLLEGE SEAL
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ACKNOWLEDGEMENT
To list who all have helped us in difficult because they are so numerous and the depth is so enormous. I would like to acknowledge the following as being idealistic channels and fresh dimensions in the completion of this project I take this opportunity to thanks the UNIVERSITY OF MUMMBAI for giving me chance to do this project. I would like to thank my Principle , for providing the necessary facilities required for completion completion of this project. I take this opportunity to thank our coordinator “ her moral support and guidance.
for
I would like to thank my COLLEGE LIABRARY , for having provided various references books and magazines related to my project. Last I would like to thank each and every person who directly or indirectly helped me in the completion of the project especially my parents and peers who supported me throughout my project.
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ABSTRACT The aim of module is to gain insights into the business of investment banks as well as the competitive forces between investment banks. Rather than giving a general overview of investment banking, this module discusses the theoretical background the helps explain the behavior of investment banks in specific business lines, e.g. M&A, IPOs, and the conflicts of interest for analysts working in investment banks. However, valuation also lies at core of investment banking and this module aims to provides a comprehensive analysis of the main valuation tools that investment banks use in investment decision,M&A, IPOs, spin-offs and leveraged-buyouts. Hence, this module covers the “deal” but also the behavior of investment bankers conducting this deals and how their motives affect their recommendations to clients. Moreover, this module assumes that students already known the basics of M&A and IPOs at least from the company perspective (motives, process, etc.)
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INDEX CHP.NO.
TOPIC
1
INVESTMENT BANKING 1.1
INTRODUCTION
1.2
DEFINITION
1.3
1.6
EVOLUTION OF INVETMENT BANKING GROWTH OF INVESTMENT BANKING FUNCTIONS OF INVESTMENT BANKING TYPES OF INVESTMENT
1.7
ORGANISATION STRUCTURE
1.8
QUALITIES REQUIRED BY INVESTMENT INVESTMENT BANKING REGULATION IN INDIA GROWTH OF INVESTMENT BAKING IN INDIA NEED OF INVESTMENT BANKING IN INDIA ORGANIZATIONAL SETUP OF INVESTMENT BANKERS IN INDIA IPO PROCESS DEBT SYNDICATION AND ITS PROCESS BUY BACK OF SHARES MERGERS AND ACQUISITION VENTURE CAPITAL FUNDING RESEARCH AND METODOLOGY DATA ANALYSIS AND INTERPRETATION OF DATA RECOMMENDATION AND SUGGESTIONS CONCLUSION BIBLIOGRAPHY
1.4 1.5
1.9 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 2 3 4 5 6
PAGE NO.
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CHAPTER 1 1.1 INTRODUCTION
Investment Banks assist corporation in raising funds in the public markets both equity and debt, as well as provide strategic advisory services for managers, acquisition and types of transactions. Investment banks differ from Commercial Banks which serve to directly take deposits and make loans.
Investment banks also differ from brokerages, which in general assist in the purchase and sale of stocks, bonds and mutual funds. However some firms operate as both brokerage and investment banks; this includes some of the best known financial services firms in the world.
Investment banks help companies and government and their agencies to raise money by issuing and selling securities in the primary market. Investment Banking is dedicated to fulfill the needs trade and includes by acting as an intermediary and a financer too.
Investment Banking I a result of oriented profession, commanding high degree of skill and dexterity in finding business solutions, assisting in investment and financial decision making assisting in laying corporate strategies, assessing capital needs and helping in procuring the owned as well as owned funds for achieving balanced capital structure of the corporate client.
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Investment bankers with the confidence of the investors of the General public, command a high reputation for passing on accurate, adequate and timely information which helps and facilitates in the functioning of capital markets, money markets and international financial systems. Investment bankers preserve their skills as personal possession for their competitive strength in their profession.
As Investment banks offer a plethora of services to its clients. These services includes providing valuable advice to the clients on the type of finance to be raised,
issue
management
process,
corporate
restructuring
strategies,
underwriting services, project feasibility and planning, etc. They provide various pre-isue and post-issue services to the clients.
An Investment bank is an organization, may be bank, corporate body, firm or proprietary concern that underwrites, corporate securities and advices such clients in issue like corporate mergers, etc. involved in the ownership of commercial ventures.
Investment Banking is one of the most global industries, and is hence continuously challenged to respond to new developments and innovation in the global financial markets.
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1.2 DEFINITIONS
SEBI
–
An Investment bank is defined as a financial institution or an
organization that underwrites corporate securities and advices such clients on issue like mergers, etc. involved be a bank, corporate body, a firm or a proprietary concern.
In the strictest definition, Investment banking helps in the raising of funds both in debt and equity, and the division handing this in an investment bank is often called the “Investment Banking Division”(IBD). However, any a few small firms solely provide this services. Almost all investment banks are heavily involved of fixed income, foreign exchange, commodity, and equity securities.
An Investment bankers acts as an intermediary between the issuers and the ultimate purchasers of securities in the primary securities market. These institutions provide guidance in raising capital, issue management services, underwrites corporate securities and provides other advisory services.
Investment banks help companies and government (or their agencies) raise money by issuing and selling securities in the capital markets (both equity and debt).
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Almost all investment banks also offer strategies advisory services for mergers, Acquisitions, divestiture or other financial services for clients, such as the trading of derivatives, fixed income, foreign exchange, commodity. Trading securities for cash or the promotion of securities or referred to as “sell side.” The “buy side” constitutes the pension funds, mutual funds, hedge funds, and investing public who consume the products and services of the sell-side in order to maximize their return on investment. Many firms have both buy and sell side components.
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1.3 EVOLUTION OF INVETMENT BANKING
The term “ Investment bank ” does not have a precise definition, but is generally applied to financial houses which, starting from trading as merchants, expanded their role to financing the trading and commercial activities of others, especially in the international market place. For many years, the British houses were know as investment banks reflecting their origins, Investment banks have retained this string international flavour and often have offices in many other countries, particularly in the major financial centers.
Investment Banking in one of the most global industries, and hence continuously challenged to respond to new development and innovation in the global financial markets. Throughout the history of investment banking, many have theorized that all investment banking products and services would be commoditized. New products with higher margins are constantly invented trading know-how in new markets. However, since these can usually not be patented or copyrighted, they are very often copied quickly by competing banks, pushing down trading margins.
For example, trading bonds and equities for customers is now a commodity business, but structuring and trading derivatives is highly profitable. Each OTC contract has to be uniquely and could involve complex pay-off and risk profiles. Listed option contracts are traded through major exchanges, and are almost as commoditized as general equity securities, products have been commoditized. 10
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In addition, while many products have been commoditized, an increasing amount of profit within investment banks has come from proprietary trading, where size a positive network benefit (since the more trades an investment bank does, the more it knows about the market flow, allowing it to theoretically make better trades and pass on better guidance to clients).
Vertical Integration Another trend in Investment Banking at the dawn of the 21 st century has been the vertical integration of debt securitization. Previously, investment banks had assisted lenders in raising more lending funds and having the ability to offer longer term fixed interest rates by converting the lenders’ outstanding loans into bonds. For example, a mortgage lender would make a house loan, and then use the investment bank to sell bonds to fund the debt. The money from the sale of the bonds can be used to make new loans, while the lenders accepts loan payments and passes the payments on to the bondholders. This process is called securitization. However, lenders have begun to securitize loans themselves, especially in the areas of mortgage loans. Because of this, and because of the fear that this will continue, many Investment Banks have focused on becoming lenders themselves, making loans with the goal of securitizing them. In fact, in the areas of commercial mortgage, many Investment Banks lend at loss leader interest rates in order to make money securitizing the loans, causing them to be a very popular financing option for commercial property investors and developers. This vertical integration was root cause of
“SUB PRIME
CRISIS”.
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1.4 GROWTH OF INVESTMENT BANKS
Investment banks will typically be concerned with several business units, including Corporate Finance (concerned with managing the finances of corporations, including mergers, acquisitions and disposals), often called the Investment Banking Division of the firm; Research (concerned with investigating, valuing and making recommendations to clients-both individual investors and larger entities such as hedge funds and mutual funds-regarding shares and corporate and government bonds); and Equities or sales and trading (concerned with buying and selling shares both on behalf of the bank’s clients and sometimes also for the bank itself).Management of the bank’s own capital, or Proprietary Trading, is often one of the biggest sources of profit; for example the banks may structure their books so the they profit form a fall of bond yields (a rise of bonds prices).
An Investment bank provides its clients expert advice, innovative solutions, outstanding execution and comprehensive access to the world’s capital markets. Whether the clients require investment banking, equities, fixed income or foreign exchange, investment banks have the intelligence, markets insight and global coverage to help them to capture opportunities and manage risk.
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1.5 FUNCTION OF INVESTMENT BANKS
An Investment banks offers a plethora of services to its clients. These services include providing valuable advice to the clients on the type of finance to be raised,
issue
management
process,
corporate
restructuring
strategies,
underwriting services, project feasibility and planning, etc. They provide various pre-issue services to the clients.
1) CORPORATE COUNSELLING Corporate counselling denotes the advice provided by an investment banker to a corporate unit to ensure better corporate performance in terms of image building among investors, steady growth through good working and appreciation in wide enough to include all activities related to investment banking such as project counselling, capital restructuring, portfolio management and the full range of financial engineering including venture capital, public issue management, loan syndication, working capital, fixed deposit, lease financing, acceptance credit,etc. However, the counseling is limited to only opinions and suggestions and any detailed analysis would from part of a specific service.
The scope of corporate counselling is restricted to the explanation of concepts, procedures and laws to be observed by the client company. Requirement of any action to
be taken or compliance of statutory
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formalities to be made for implementation of those suggestions would mean the demand for specific type of service.
An Investment banker provide valuable financial advisory to the client company. It advises the company on the type of capital to be raised owned or owed thus the company to take advantage of financial leverage and achieve its ultimate aim of providing maximum return to the shareholders.
It advises the company to raise fund through equity issue in the primary market or issuing debentures or the public depending on the quantum of capital required.
2) PROJECT COUNSELLING
Project counselling is a very important and lucrative investment banking service. It is provided by most of the investment bankers. However, only a few having expertise available in technical, marketing financial area have it to provide satisfactory services. Project counselling covers development of an idea into a project, preparation of the project report, estimation of the cost techno-economic appraisal of projects for capital issue/financing, etc. The fee charged for project report preparation/ appraisal range from 0.25% to 2% of the total project cost. The fee charged depends upon:
Total size of the project.
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The complexity of the project.
3) LOAN SYNDICATION
Loan syndication refers to the services rendered by an organization in arranging and procuring credit from financial institutions, banks, other lending and investment companies for financing the project or meeting lending capital requirements. The loan syndication work involves identification of sources where from funds could be arranged. Approaching these sources with requisite application and supporting documents and complying with all formalities involved in the sanction and disbursal of loan. The fee charged by investment bankers for undertaking loan syndication varies up to 1% of the loan amount.
4) MANAGEMENT OF CAPITAL ISSUES The capital issues are managed by category- I investment bankers and Constitute the most important aspect of their services. The public issue of corporate securities involves marketing of capital issue of new and existing companies, additional issue of existing companies including rights issues and dilution of shares by letter of offer. The public issues are managed by involvement of various agencies, i.e. underwriters, broker’s bankers, advertising agencies, printers, auditors, legal advisors, registrar to the issue and investment bankers providing specialized services to make the issue a success. However, investment bankers is the agency at the apex level who plan, co-ordinate and control the entire issue activity and direct different
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agencies to contribute to the successful marketing of securities. The procedure of managing a public issue by investment bankers is divided into two phases.
(A)
Pre-issue Management
Steps required to be taken to mange pre-activity is as follows:
(1) Obtaining stock exchange approvals to memorandum and articles of association. (2) Taking action a as per Exchange Regulatory guidelines. (3) Finalizing the appointments of the following agencies: (a) Co-managers/Advisers to the issue. (b) Underwriters to the issue. (c) Brokers to the issue. (d) Bankers to the issue and refund Banker. (e) Advertising agency. (f) Printers and Registrar to the issue. (4) Advise the company to appoint auditors, legal advisers and broad base Board of Directors. (5) Drafting of prospectus. (6) Obtaining approvals of draft prospectus from the company’s legal advisers, underwriting financial institutions/banks. (7) Obtaining consent from parties and agencies acting for the issue to be enclosed with the prospectus. (8) Approval of prospectus from Exchange regulatory. (9) Filing of the prospectus with Registrar of Companies (ROC). (10) Making an application for enlistment with Stock Exchange along with copy of the prospectus. 16
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(11) Publicity of the issue with advertisement and conferences. (12) Open subscription list.
(B)
Post-issue Management
Steps involved in post-management are :
(1) To verify and confirm that the issue is subscribed to the extent of including development from underwriters in case of under subscription. (2) To supervise and co-ordinate the allotment procedure of registrar to the issue as per prescribed Stock Exchange guidelines. (3) To ensure issue of refund order, allotment letters/ certificates within the prescribed time limit of 10 weeks after the closure of subscription list. (4) To report periodically to exchange regulatory about the progress in the matters related to allotment and refunds. (5) To ensure the listing of securities at Stock Exchange. (6) To attend the investors grievances regarding the public issue. The investment bankers for managing public issue can negotiate a fee subject to a ceiling. This fee is to be shared by all lead managers, advisers, etc. (a) 0.5% of the amount of public issues up to Rs.25 crores and (b) investment bankers are managing the issue. Cities are done by all categories of investment bankers except category-IV. This activity is a good business option if due care is taken in selecting and marketing the issue so that likely development is generated. The investment bankers are authorized to take a maximum underwriting of 5 times its net wroth at any point of time. 17
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(7)
PORTFOLIO MANAGEMENT
Portfolio management involves selection of securities and constant shifting of the portfolio in the light of varying attractiveness of the constituents of the spectrum of securities to the portfolio based on the characteristics of an investor. Investors normally expect high returns but they wish to avoid risk. Therefore a scientific portfolio management is required. The objective of portfolio management is to maximize the yield and minimize the risk along with other objectives like stability of income, capital growth, liquidity, safety, tax incentives, etc.
The portfolio management service can be rendered by category-I and II investment bankers. The portfolio manger pursuant to a contract or agreement with a client advices or director or undertakes on behalf of the client the management of investment of different types of marketable securities or investment papers ‘like shares, debentures, bonds, etc. with a view to ensure maximum return, by such investments by minimum risk of loss of return. Portfolio management should aim at investing in different securities and financial instruments so as to earn best possible returns besides safety and security of invested funds. There are certain guidelines laid down by the exchange regulatory. These guidelines pertain to the duties and responsibilities of the portfolio manager for reprisal of grievances and 18
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penalties for non compliances. With more and more companies tapping the capital markets, the investor is more likely then non-equipped to handle the complexities of stock-trading. Portfolio management as a concept is catching up in India.
(8)
EQUIPMENT LEASING AND HIRE PURCHASE
The financial services of equipment leasing and hire-purchase are offered by most of the investment bankers. Leasing and hire-purchase income constitute a major portion of total income generation of present day investment banking organizations. The rental/installments provide returns of about 20% and in addition provide a tax shield.
(9)
DEALING
IN
SECONDARY
MARKET-
OPERATION
The lending investment bankers also deal in sale/purchase of securities in secondary market on their own. This activity is followed on account of availability of expertise in finance, in general and capital markets and equity research in particular company.
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(10)
MERGERS AND ACQUISITIONS (M & A)
For investment bankers mergers and acquisitions is promising to be new business. New entrants view mergers and acquisitions more seriously. Mergers and acquisitions is an important additional business. M&A was not in focus till recently but now all investment bankers are planning to the largest investment bank are in the low thousands. Success in the Investment banking business depends on the ability to provide whatever financial services a client may require, and people employed need particular qualities of flexibility, innovativeness and client handling skills.
(11)
RESTRUCTURING SERVICES
Investment bankers assist the management of the client company to successfully restructure various activities, which include mergers and acquisitions, divestitures, management buyouts, joint venture among others.
To help companies achieve the objectives of these restructuring strategies, the investment bankers participates in different activities at various states which
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include understanding the objectives behind the strategy (objective could be either to obtain financial, marketing or production benefits), and help in searching for the right partner in the strategic decision and financial valuation of the proposal.
(12)
CAPITAL ASSISTANCE
In providing financial assistance, investment banks offer a full understanding of all facets of the capital markets. This includes all types of debt and equity financing available from both the domestic and international markets. An investment bankers, cognizant of capital costs, looks for the best sources of capital.
It should be understood that interest rates are not only definition of capital costs. Restrictions on availability, prepayment terms, and operating effectiveness can often outweigh what might appear to be inexpensive capital with low interest rates. Too often, capital includes costs, which force an entrepreneur or a business to undertake undesirable actions. In short- run, some actions might be necessary, but often in the long run are detrimental.
The traditional investment banker understands these capital limitations and can structure a transaction, which is beneficial to all sides of the table-not just the capital source.
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He also know how to substitute one type of capital for another, sometimes utilizing internal sources from asset repositioning or cash creation from improvements in working capital. He understands fully the risk versus return elements necessary to complete the capital procurement process.
(13)
CORPORATE ADVISORY SERVICES
Investment banker’s offer customized solutions to solve the financial problems of their clients. Advice is sought in areas off financial structuring. Merchant bankers study the working capital practices that exist within the company and suggest alternative policies. They also advise the company on rehabilitation and turnaround strategies, which would help companies to recover from their current position. They also provide advice to appropriate risk management strategies like hedging strategies.
(14)
FACTORING SERVICE
Factoring involves the outright sale of account receivable. By such sale a client (the exporter or manufacturer) transfers his/her ownership of the accounts to a factor (an organization, firm). It is short – term debt financing. Here three parties are involved. 1. The factoring organization/ firms 2. The manufacturer/ exporter / seller 3. The importer / customer / buyer
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The investment bankers may act as factor organization with a view to earning a great amount of commission. The factor provide the following services : 1) Financing 2) Advisory services if necessary 3) Collection of bills / Account Receivable against sales produced. 4) Maintenance of sales ledger 5) Provide further if necessary 6) Covering losses if there are any.
(15)
ASSET SECURITIZATION
It is a process through which some inactive assets (mortgage assets) are converted into cash / active assets. It is long – term debt financing. Here assets are converted into long – term bonds. In this approach, the investment banker for issuance of security bonds against the assets with a matching of time and terms between mortgage property and security bonds. Here the selection of assets is generally considered on the basis of the following : 1) Quality of assets
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2) Certainty of repayment 3) Good ranking from the credit rating agency.
The process of assets securitization takes place in the following firms : 1) Originating Institutions / Firm 2) Special Purpose Vehicle (SPV)
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1.6 TYPES OF INVESTMENT BANKS
With the continued developmental activities in the country as well as liberalization of the economy the industry and trade requires funds for its expansion which are in excess of that, which is available from institutions. Thus there is a need to collect the funds from capital market and investment bankers are needed to help in mobilizing the funds. This factor has contributed to the steady growth of investment banking in the country. In order to regulate the market and check unfair trade practices on the stock Exchange, the Government of India in 1992 passed the Securities and Exchange Board of India (SEBI) Act. SEBI for the first time formally defined investment banking and framed rules and regulations for investment bankers. SEBI classified investment bankers into four categories on the basis of capital adequacy :
(1)
Category – I :
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The capital adequacy requirement for category-I investment bankers in that net wroth should not be less than Rs. 1-crore. The bankers should be allowed to :
a) Carry on any activity of the issue management which will in turn consists of preparation of prospectus and other information relating to the
issue,
determining financial structure, tie up of financial, financiers and final allotment and refund of the subscription. b) Act as adviser, Consultant, manger, underwriter, portfolio manger.
(2)
Category – II :
The minimum capital adequacy requirement is a net wroth of Rs.50 lakhs. The category-II investment banker is allowed to act only as an adviser, consultant, Co-manger, underwriter and portfolio manager.
(3)
Category – III :
The Investment banker should have a minimum net wroth of Rs.20 lakhs to meet the capital adequacy requirement. The permissible activities are to act as underwriter, adviser and consultant to an issue.
(4)
Category – IV :
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No capital adequacy requirement has been specified for category-IV investment banker. The Investment banker is only allowed to act as an advisor or consultant to an issue.
Category
Minimum Amount
I
Rs.1 Crore
II
Rs.50 Lakhs
III
Rs.20 Lakhs
IV
NIL
It is evident from the above that according to central Government, the role of investment banker is restricted to activities related to capital market.
However investment banking cannot be restricted to the above descriptions and cover a wide range of activities which are fund based non-fund based financial and investment services encompassing both capital as well as money market activities in domestic as well as international financial markets. Fund based and Non Fund based Sources of Financial :
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Fund based source of finance refers to those sources of finance which actually gets funds or money in the organization e.g. secured loan, equity shares, etc. The fund based activities undertaken by investment bankers encompass the following:
(1) Dealing in money market instruments like placement of commercial papers, fixed deposits, treasury bills, etc.
(2) Equipment leasing / Hire Purchase.
(3) Dealing in secondary market operations.
(4) Inter-corporate placement of funds.
(5) Venture capital/fund.
Non – fund based source of finance refers to those sources of finance which only assure the supply of fund but does not get the fund in real terms. E.g. letter of credit.
The non- fund based activities consist of the following: (1)
Capital issue related activities and private placement of equity. 28
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(2)
Consultancy and advisory services including corporate and project counseling.
(3)
Loan / credit / Fund syndication.
(4)
Portfolio management
(5)
Management of mergers and amalgamations.
(6)
Management of Buy-ins and Buy-outs.
(7)
Financial engineering or capital restructuring.
(8)
Liaison and Braking.
(9)
Underwriting of equity, bonds and debentures in new issues.
(10)
Mergers and acquisitions.
(11)
Arranging international finances.
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1.7 ORGANIZATION STRUCTURE An investment bank is split into the so-called Front office, Middle Office and Back Office. The individual activities are described below :
Front Office
Investment Banking is the traditional aspect of investment banks which involves helping customers raise fund in the Capital markets and advising on mergers and acquisitions. Investment bankers prepare idea pitches that they bring to meetings with their clients, with the expectation that their effort will be rewarded with mandate when the client is ready to undertake a transaction. Once mandate, an investment bank is responsible for preparing all materials necessary for the transaction as well as the execution of the deal, which may bidders, or negotiating with a merger target. Others terms for the investment banking division includes merger & acquisition (M&A) and corporate Finance. Financial Markets is split into four key divisions: Sales, Trading, Research and Structuring.
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Sales and Trading is often the most profitable area of an investment bank, responsible for the majority of revenue of most investment banks. In the process of market making, traders will buy and sell financial products with the goal of marketing an incremental amount of money on each trade.
Sales is the term for the investment banks sales force, whose primary job is to call on institutional and high-net-worth investors to suggest trading ideas (on caveat emptor basis) and take orders. Sales desks then communicate their clients’ orders to the appropriate trading desks, which can price and execute trades, or structure new products new that fit a specific need.
Research is the division which reviews companies and writes reports about their prospects, often with “buy” or “sell” ratings. While the research division generates no revenue, its resources are used to assist trades in trading, the sales force in suggesting ideas to customers, and investment bankers by covering their clients. In recent years the relationship between investment banking and research has become highly regulated, reducing its importance to the investment bank.
Structuring has been a relatively recent division as derivatives have come into play, with highly technical and numerate employees working on creating complex structured products which typically offer much greater margins and returns than underlying cash securities. 31
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MIDDLE OFFICE Risk management involves analyzing the market and credit risk that traders are taking onto the balance sheet in conducting their daily trades, and setting limits on the amount of capital that they are able to trade in order to prevent ‘bed’ trades having a detrimental effort to desk overall. Another key Middle Office role is to ensure that the above mentioned economic risks are captured accurately (as per agreement of commercial terms with the counterparty) correctly ( as per standardized booking models in the most appropriate systems) and on time (typically within 30 minutes of trade execution). In recent years the risk of errors has become known as “optional risk” and the assurance Middle Office provide now include measures to address this risk. When this assurance is not place, market and credit risk analysis can unreliable and open to deliberate manipulation.
BACK OFFICE Operations involves data-checking trades that have been conducted, ensuring that they are not erroneous, and transacting the required transfers. Whilst it 32
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provides the greatest job security of the divisions within an investment bank, it is a critical part of the bank that involves managing the financial information of the bank and ensures efficient capital markets through the financial reporting function. The staff in these are often highly qualified and need to understand in depth the deals and transaction that occur across all the division of the bank.
1.8 QUALITIES REQUIRED BY AN INVESTMENT BANK (1) Research : An Investment bank must have quality data available as per the needs of Client Company in order to provide advisory services. It must have update information about market on-goings. The data collected should be authentic and from reliable sources.
(2)Analysis : The data available should be analyzed to make decisions. Data analysis is an important tool in decision making. Accurate data analysis will help provide advisory service to the client to take advantage of the current market situation.
(3) Pro-active approach : It is important to analyze and interpret market trends in order take advantage of a particular situation.
(4) Aggressive action :
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Investment bankers are always looking for new business opportunities. On locating a business opportunity and after obtaining the assignment from the clients, an investment banker has to be prompt in grasping from the client’s problems and to provide a better choice amongst alternative solutions. A good investment banker in one who does not allow his clients to think anything outside except what has been advised and thus holding the client’s interest for the present as well as for the future.
(5) Co-operation and Friendliness : Co-operation and friendliness coupled with persuasiveness must flow as natural traits in the investment banker in order to win over the trust of their clients just like a doctor or a lawyer who retains their clients permanently. A good investment banker has to share the thoughts of his clients with sympathetic gestures and offer suggestions without any greed or favours.
(6) Contacts : An Investment banking business mainly depends upon the sociable nature and wider contacts. The scope of contract of an investment banker covers: a) His own organization, b) Central and state Government Offices, c) Banks, d) Financial Institutions, e) Promoters/Directors/Owners/Chief Executive of the public and private enterprises, 34
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f) Printers, g) Advertising Agencies, h) Broker and Stock Exchange Dealers, i) Advocates and Solicitors, j) Members of the press, etc. Investment bankers have to widen the contacts and continue to maintain them by meeting people in person, in special gatherings and through writing to them.
(7)Attitude towards problem solving: A good quality of an investment banker is to be skilled in human relations particularly in the interpersonal and intra-personal behavior. An investment banker should have a positive approach to understand the difficulties, adverse circumstances and the viewpoints of others. Effective communication and proper feedback are the pre-requisites for creating a positive attitude towards problems solving which could be gained partly through the learning process and partly as an inborn personality trait.
(8) Inquisitiveness for acquiring new skills, information and knowledge : Investment bankers survive by providing the information required by their needy client. Therefore they must keep themselves updated with the latest information in the area of the service product ehich they market.
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1.9 INVESTMENT BANKING REGULATION IN INDIA
Investment banking in the country has come to be primarily associated with the capital markets. With the de-regulation of the Indian economy since 1991, there are several new sectors open to private investment which have consequently created an opportunity for private financing.
The need for this banking was not met, by either commercial banks or the financial institutions and hence there was a huge gap which needed to be filled. This gap could be met through capital markets or a range of finance products and hence a good scope existed for the various services offered by an investment 1992 heralded an era free market pricing of equity shares. Investment bankers in particular have been assigned a greater responsibility in the fixation of issue price and premium, if any. In the CCI regime investment bankers had restricted role to play in that regard. Their role was
36
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confined mainly to getting clearances from the CCI and ensuring the success of capital issues through their marketing efforts.
There were also no disclosure norms. Investment bankers were seldom held accountable for the correctness of the information disclosed in the prospectus and letter of offer. But with the issuance of comprehensive guidelines for free market pricing, code of conduct for investment Bankers, etc. by SEBI the role of investment bankers has considerably increased.
An outstanding development in history of Indian capital market was opening up in 1992 by allowing financial institutions to invest in the primary and secondary markets and also permitting Indian companies to directly tap foreign capital markets through foreign currency issues. This resulted in increased total inflow of foreign capital through these routes. Though, at the initial stage, the Indian investment bankers have played only supportive role as almost all of the foreign currency issue have been lead managed by foreign investment bankers, but in future they may play a major role by their increasing participation as managers/lead managers. Foreign Direct Investment (FDI) as also investment by NRIs have risen considerable due to number of incentive offered to them. They need the services of investment bankers to advise them for their investment in India. Further, increasing investments in joint Ventures abroad by Indian Corporations also require expert services of investment bankers. For the first time in India the concept of debt market has set to work through NSE and OTCEL. Experts feel that of the estimated capital issue a good portion may be raised through debt 37
Investment Banking
instruments. The development of debt market will offer tremendous opportunity to investment bankers. Recently, Indian capital market has also witnessed innovations in the financial instruments such as non-convertible debenture with detachable warrants, cumulative convertible preference shares, zero coupon bonds deep discount bonds, triple option bonds, floating rate bonds, secured premium notes, auction rates bonds, etc. This has further” extended the role of investment bankers as market markers for these instruments. Securities and Exchange Board Of India (SEBI) has laid certain guidelines to ensure fair business practices in the Indian markets. The following are the SEBI guidelines for investment bankers –
(1) Authorization : Any person or body proposing to engage in the business of investment banking would need authorized by the Securities and Exchange Board of India (SEBI) in their prescribed format. This will also apply to those presently engaged in investment banking activity, including as mangers, consultants, or advisers to issue of management, which inter-alias will consist of preparation of prospectus.
(2) Authorized activities : a) Issue & other information relating to the issues, determining final other information relating to the issue, determining financing structure, tie-up of financiers & final allotment & for refund of subscription b) Corporate advisory services relating to the issue c) Underwriting d) Portfolio management services e) Managers, consultant or adviser in the issue 38
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(3)Authorization Criteria : All investment bankers are expected to perfume with high standards of integrity & fairness in all their dealings. A code of conduct for investment bankers will be prescribed by SEBI . Within this context, SEBI’s authorization criteria would take into account mainly the following – a) Professional competence b) Personnel, their adequacy & quality, & other infrastructure c) Capital adequacy d) Past track record, experience, general reputation & fairness in all their transaction
(4) Terms of authorization : a) All investment bankers, including the existing ones, must obtained the authorization from SEBI within three months from the issue of these guidelines. SEBI may extend this period at its discretion by a maximum of three more months. b) All investment bankers must have a minimum net wroth of RS 1 crore. c) The authorization will be for a initial period of 3 years d) SEBI may collect from the investment bankers an initial authorization fee, an annual fee & a renewal fee e) All issue must be managed by at least one authorized banker functioning as the sole or lead manager. Ordinarily not more than two investment bankers should be associated as lead managers, advisers or consultant to a public issue
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f) The specific responsibilities of each lead manager must be submitted to SEBI prior to the issue g) While directors, promoters & every person who authorizes the issue of prospectus shall bear full responsibility for the contents of the prospectus, investment the contents of prospectus & reasonableness of the views expressed therein h) Lead mangers/investment bankers would be responsible for ensuring timely refunds and allotment of securities to the investors. i) The investment banker shall make available to SEBI such information, documents, returns as may be prescribed & called for. j) SEBI shall prepare & prescribed a code of conduct for investment bankers which they should adhere to. k) The involvement of this investment bankers in an issue should continue at least till the completion of essential follow-up steps, which must include the listing of the instrument, dispatch of certificates l) SEBI may suspend/cancel the authorization of investment bankers for a suitable duration in case of violations of the guidelines.
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REGULATION WITH RESPECT T THE CODE OF CONDUCT An Investment banker will be deemed to be guilty of misconduct or unprofessional conduct if he violates intentionally or otherwise any of the following provisions of the Code of Conduct: (1) An Investment banker in the conduct of his business shall observe high standards of integrity and fairness in all his dealing with his client and other investment bankers. (2) An Investment banker shall render at all times high standards of service, exercise due diligence, ensure proper care and exercise independent professional judgments. (3) He shall wherever necessary, disclose to the client possible sources of conflict of duties and interests , while providing unbiased services. (4) A investment banker shall not make any statement or become privy to any act, practice unfair competition, which is likely to be harmful. a. To the interests of other investment bankers or
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b. Is
likely
to
place
such
other
investment
bankers
in
a
disadvantageous position in relation to the investment banker, while competing for or executing any assignment. (5) An Investment banker shall not make any exaggerated statement, whether oral or written, to the client either about the qualification or the capability to render certain services or his achievements in regard to services rendered to other clients.
(6) An Investment banker shall always endeavor to: a. Render the best possible advice to the client having regards to the clients needs and the environment and his own professional skills; b. Ensure that all professional dealings are effective in a prompt, efficient and cost effective manner.
(7) An Investment banker shall not: a. Divulge to other clients, press or any other party any confidential information about his client, which has come to his knowledge; and b. Deal in securities of any client company without making disclosure to the Board as required under the regulations and also to the Board of Directors of the company.
(8) An investment banker shall endeavor to ensure that: a. The investors are provide with true and adequate information without making any misguiding or exaggerated claims and are made aware of attendant risks before any investment decision is taken by them
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b. Copies of prospectus, memorandum and related literature are made available to the investors; c. Adequate steps are taken for fair allotment of securities and refund of application money without delay; and d. Complaints from investors are adequately dealt with.
(9) An Investment banker shall not generally and particularly in respect of issue of any securities be party to: a. Creation of false market; b. Price rigging or manipulation; c. Passing of price sensitive information to brokers, members of the stock exchanges and other players in the capital market or take any other action which is unethical or unfair to the investors.
(10)
An Investment banker shall abide by provisions of the Act, Rules
and Regulations, Notifications, Guidelines, etc. which may be applicable and relevant to the activates carried on by the investment banker.
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1.10 GROWTH OF INVESTMENT BANKING IN INDIA Investment banking activates in India originated in 1969 with the investment banking division set up by the Grind lay’s Bank, the largest foreign bank in the country, at that time. The main service offered to the corporate enterprises by the investment bank included management of public issues and financial consultancy. Other foreign banks like Citibank, Chartered Bank also assumed the investment banking activity in India. State Bank of India started investment banking in 1973 followed by ICICI in 1974. Both emerged as leaders in investment banking with significant business during the period of 1974-1985 in comparison to foreign banks. Mid-seventies witnessed a growth of investment bank organizations in the country with various commercial banks, financial institutions, broker firms entering into the field of investment banking. The growth in investment banking business during the early seventies was due to Foreign Exchange Regulation Act, 1973 (FERA) where in a large number of foreign companies operating in India were required to dilute their foreign holding in order to continue business in the country. This resulted in 44
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expansion of capital markets providing enough in India economy opened new doors for investment banking business to enter in the diversified area of activities, but at the same time this has brought competition in the investment banking sector. This sector has traditionally been dominated by financial institution, banks and their subsidiaries. Now, various private sector investment bankers have emerged and some of them are having international reputations.
1.11 NEED OF INVESTMENT BANKING IN INDIA Important reasons for the growth of investment Banks in India has been development activities throughout the country, exerting excess demand on the sources of funds for ever expanding industries and trade, thus leaving a widening gap un-bridged between the supply and demand of investible funds. All India Financial Institution had experienced constraint of resources to meet ever increasing demands for funds from the corporate sector enterprises. In such circumstances corporate sectors had the only alternative to avail of the capital market service for meeting their long term financial requirements through capital issue of equity shares and debenture. Growing demand for finds put pressure on capital market that enthused commercial bank, share brokers and financial consultancy firms to enter into the field of investment banking and share the growing capital market. As a result, all the commercial banks in nationalized and public sector as well as in private sector including foreign banks in India have opened their investment banking and are competing in this field.
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Need for investment banking is felt in the wake of huge public savings lying untapped. Investment bankers can play highly significant role in mobilizing funds of savers to investible channels assuring promising returns on investment and thus can assist in meeting the widening demand for investible funds for economic activity. With growth private and public sectors would be able to raise required amount of funds annually from the capital market to meet the growing requirement for funds for establishment for funds for establishing new enterprises undertaking expansion, modernization, diversification of the existing enterprises. This reinforces the need for a vigorous role to be played by investment banking. In view of multitude of enactments rules and regulations, guidelines and offshoot press release instructions brought out by the government from time to time imposing statutory obligations upon the corporate sectors to comply with all those requirements prescribed therein the need of a skilled agency existed which could provide counseling in these matters in a package from. Investment bankers with their skills updated units and advise them on such requirements to be enactments viz. Companies Act, Income tax Act, Foreign Exchange Management Act, and Securities Contracts (Regulation) Act, SEBI Act and various corporate laws and regulations. Investment Bank advise the investors of the incentives available in the from of tax relief’s, other statutory relaxations, good return on investment and capital appreciation in such investment to motivation them to invest their savings in securities of the corporate sector. Thus investment banks help industries and trade to raise funds and the investors to invest their saved money in sound and healthy concerns with confidence, safety and expectations for higher yields. Finance is the backbone of business activities._ Investment Banks make available finance for business enterprises acting as intermediaries between
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them raising demand for funds and the supplies of funds besides rendering various other services.
The following are some of the reasons why specialist investment banks have a crucial role to play in India : (a) Growing industrial and increase of technologically advanced industries. (b) Need for encouragement of small and medium industrialists, who require specialist services. (c) Growing complexity in rules and procedures of the government. (d) Need to develop backward areas and states which require different criteria. (e) Exploring the possibility of joint venture abroad and foreign markets. (f) Promoting the role of new issue marketing mobilizing savings from the public.
Steps for Setting up Investment Banks : (1) Formation of the business organization.
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(2) Adoption of a viable business plan. (3) Seeking SEBI registration as an investment banker. (4) Essentials for commencement of business.
1.12 ORGANISATION SET UP OF INVESTMENT BANKERS IN INDIA :
In India, a common organizational st up of investment bankers to operate is in the from of division of India foreign banks and financial institution, subsidiary companies established by bankers like SBI, Canara Bank, Punjab National Bank, Bank of India, etc. Some firms are also organized by financial and technical consultants and professionals. Securities and Exchange Board of India has dividend the investment bankers into four categories based on their capital adequacy. Each category is authorized to perform certain functions. From the point of organizational set up, India’s Investment banking organizations can be categorized into four groups on the basis of their linkage with parent activity. They are :
(a)
Institutional Base : 48
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Here Investment banks function as an independent wing or as subsidiary of various private, Central Governments, and State Government financial institutions. Most of the financial institutions in India are in public sector and therefore such set up plays a role on the lines of governmental priorities and policies.
(b) These
Banker Base :
investment
bankers
function
as
division/subsidiary
of
banking
organization. The parent banks are either nationalized commercial banks, private sector banks or the foreign banks operating in India.
These organization have brought professionalism in investment banking sector and they help their parent organization to make a presence in capital market.
(c)
Broker Base :
In the recent past, there has been an inflow of qualified and professionally skilled brokers in various Stock Exchange of India. These brokers undertake investment banking related operations also like providing investment and portfolio management services.
(d)
Private Base :
These investment banking firms are originated in private sector. These organization are the outcome of opportunities and scope in investment banking business and they are providing skill oriented specialized services to their independently or through some collaboration with their Indian counterparts. Private sector investment banking firms have come up either as sole proprietorship, partnership, private limited or public limited companies. Many of these firms were in existence for quite some times before they added a new 49
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activity in the from of investment banking services by opening few division on lines of commercial banks and All India Financial Institutions.
IMPORTANT ACTIVICTIES UNDERTAKEN An Investment bank through its various services provided, help customers reap benefits of hiring their services. An investment bank provides apt and services to the clients. The services provided by these organization range from raising capital from the market, corporate restructuring to instrument designing or pricing (debt or equity). Financial engineering issue management, designing and publishing the issue prospectus, marketing & advertising, Loan syndication, etc. are other specialized service provided by the institutions. It is different for a company to manage these activities independently without the advice of such specialized organizations. At the same time it mat not prove to be cost effective to carry out such services by the company itself.
Specialized Services :
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Investment banks provide specialized services to their client. It is the professional approach in decision making that help their client to reap benefits of hiring the services of such companies.
Advisory Services : Investment banks provide valuable advisory services to their clients on various areas. They have the expertise to advise client in decision making and make profits thereof.
To understand the importance of Investment banks, it is necessary to have a look at the services provided by them to the Corporates. These services as of now of Investment bankers in India are primarily restricted to Finance Procurement. Therefore in this section we propose to throw light on the following most important activities undertaken by an Investment Banker. 1. IPO Process 2. Debt Syndication 3. Buy Back Of Share 4. Mergers & Acquisition 5. Venture Capital Funding
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Before we move on the activities undertaken, it is essential to understand a few basic terminologies, which make understanding the above cases easier: SEBI : Securities & Exchange Board Of India
MANDATE LETTER : This is a document issued by the client company to an investment banker. This letter contains a confirmation from the client company to the Investment Bank as regards their appointment and also the details of the Services, terms and conditions, etc. required to be fulfilled by investment hint Banks are contained.
1.13 IPO PROCESS In Modern times IPO is considered as a major source for raising equity finance by the companies. The Public Offerings are of 2 types. The process of an IPO is in one way or the other similar to the process of an FTO. The process of IPO. Fixed Price Issue : A fixed price issue is where the issuing price of the share id
fixed in advance before the opening date of the issue. Book Build Issue : In this type of issue, the issue of the share is stated in terms
of a range / price band. The final issuing price can be anything in between this range. E.g. A Price Band of Rs.100 to 110. STEP 1
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The first step includes all activities prior to the IPO. The process followed in this step are as follows: Offer : An Investment Bank is approached by a company, offering it to become
the Lead Manger to the Issue. Acceptance : After the offer by the Client Company, the Investment Bank
before accepting the offer conducts a Due Diligence of the client. They look at the past record of this company and decide whether to take up the IPO or not. Mandate Letter : Once the Investment Bank agrees to act as the Lead Manger
to the Issue, they are issued a Mandate Letter by the Client. This is the official permission by the company to the merchant bank to act as the Lead Manager.
IPO Team & Various Appointments : In this case the Investment Banker and
the Client Company constitutes a dedicated IPO Team. This team works together towards the execution is made of the company. This presentation contains a past performance of the company. Now various agencies such as Banks, Registrars, PR agency, Syndicate members, Legal Advisory team, etc. are invited for a meeting and shown the presentation. Here also an offer is made to various agencies to partner in the IPO for the completion of different activities. It is also possible that all the agencies may be directly appointed by the company or the Investment Banker, as the case may be. Preparation of DRHP : Draft red herring prospectus has to be filed with the
SEBI, before the official announcement of the IPO. This is the most important document of the entire IPO process, as the permission for an IPO depends on 53
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this document. It is very lengthy process and has to be drafted very carefully. It has different sections. The various agencies appointed above are asked to prepare their relevant sections of DRHP, which is then compiled. Here apt attention should be paid to the financials of the company. Every bit of information mentioned in the DRHP should be true to the fullest extent; otherwise it may attract heavy penalty. The contents of DRHP should be signed by the relevant agencies. The Investment Banker has to not only assisted in compiling information, but also has to prepare the sections of the DRHP falling under his scope of activity such as the financial, the valuation of shares, etc.
Completion of Preliminary Formalities: This is the crucial aspects of an IPO.
Here the Investment Banks assume of an advisory role. They advise the company as regards the capital structure to be met for the listing requirements of the stock exchanges, modify and amend articles through proper resolution to meet the legal requirement of the company law board, etc. Other advisory services provided by the Investment banks are as under : a) Conduct and service on legal and financial due – diligence advised by the legal council. b) Discussion with the auditor for the final reporting requirement to SEBI. c) Drafting and finalization of the DRHP for filling with SEBI. d) Initiate the process of connectivity with depositories in co-ordination with Registrations. NSDL, CSDL. 54
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e) Finalize communication strategy, corporate advertisement strategy and issue advertisement strategy. The last step in this section is filing the DRHP with SEBI, application for listing of shares with the stock exchange.
STEP 2
Before we move on to the step of pre- issue marketing, it is necessary to understand the types of investors. Shown above are the different categories of investors targeted by the company for subscription of the issue.
Pre-issue Marketing Comprises the Following activities :
(a) Preparation of a detailed research report on the company and the industry. This report is always based n the past performance of the company and does not include future projection. (b) Circulation of this report to the Institutional Investors. (c) Hold a meeting with the institutional investors. In this meeting they are spoken to and convinced to buy the shares of the company. Also their advise is taken on various issues such as the valuation of shares, etc.
MARKETING PRIOR TO FILING DRHP WITH THE SEBI
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In this step the company primarily targets the Qffi’s. This is due to the following reasons : (a) They purchase shares in bulk. (b) In a book building issue, they are the ones who buy at the highest price. (c) Also there is stability and lesser speculation if shares are purchased by Qffi’s as they do not speculate with the mark et changes. STEP 3
Prior to the commencement of this step the following activities have been completed. (a) DRHP field with SEBI and comments and feedback have been received. (b) Reply to the comments provided through the red herring prospectus. (c) Permission obtained from SEBI for commencement with the Issue.
ISSUE MARKETING :
This is relatively the most important step, which might ensure the success or failure of the issue. In this step the entire issue is marketed to the various investors. The following are the major activities : a) Statutory Advertisements are given in the news papers. b) Marketing done through TV Commercial and hoardings. c) Meeting with the Brokers, analysts and the press. This is by far one of the most important meeting in this stage. It is a confidence building move by the company, in which the above 3 parties are made presentation about the company. d) The Investment Bankers also organize Road Shows. Under them the Promoters of the company and the company and the 56
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representatives go to meet various agencies, institutional bidders, appear on TV and speak about the issue. STEP 4 :
Before the start of this step, the Issue has been opened, subscribed to and also closed. During the issue, the Investment Banks have no major work. The only activity that they undertake during that period is supervision as to the collection of subscription money and make sure everything is being carried out smoothly. They oversee the accounting aspects of the issue. In case the issue is subscribed or over subscribed, they proceed with the following steps. However in case the issue is undersubscribed, then underwriting agreements are enforced and shares are allotted to underwriters, and after that the following activities are carried out : POST – ISSUE OBLICATIONS :
(a) Issue – price advertisement: Under this the merchant bankers announce the final issue price. This is the price at which the shares allotted to the investors. (b) Prepare a consolidated report applications received, publicize the performance of the issue and decided the basis of allotment depending upon the response from the formalities. (c) Updating the prospectus for the prices, issue size, the basis of allotment and other statutory formalities. (d) File the updated prospectus and the underwriting agreement with SEBI. (e) Submit the 3 day report to SEBI.
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(f) Announce dates of allotment of shares, transfer of money from the Escrow account to the public issue account. (g) Allotment of shares to the general public in co-ordination with the registrar, Stock Exchange and the public Representatives. (h) Announcement of Allotment o shares, basis of allotment of shares and the expected date of delivery of shares in the DEMAT A/c. and transfer of money or dispatch of refund order as the case may be to the public. (i) Obtain listing permission and Listing of shares on the stock Exchanges. (j) Transfer of shares in the DEMAT A/c. Passing of ECS for refund in coordination with bankers and dispatch of refund orders if any. (k) Filing of the VS day report with SEBI. (l) Obtain trading permission from SEBI and the Stock Exchange. (m)During the entire IPO process, investment Banks have to comply with many Rules and Regulations.
1.14 DEBT SYNDICATION Before we move on understanding the process of debt syndication let us understand what debt syndication is all about? In modern time business many companies require financial resources to carry out their expansion / development activity, etc. there can be 2 ways of finance, Debt & Equity. Above we saw one of the methods of raising equity capital. Now we shall have a look at a method of raising borrowed funds / Debt Capital.
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Debt in company’s capital structure has its advantages as well as disadvantages. The main reason for the companies to prefer to use debt as a source of finance is due to its easy availability and low procurement cost. When the requirement of funds is small / the amount to be raised via debt is small, than it is possible to take the entire amount form one bank. However when the requirement of loan is huge. Which cannot be financed by one bank, than there is need for one or more banks join together and collectively provide the required loan. The second phenomenon is called debt syndication and this will be the crux of discussion in this case study. Debt syndication in not an easy activity. It is very lengthy and a time consuming activity. The entire activity from the start to end takes 2 months of time. The compliance of the legal formalities is what makes the entire procedure lengthy.
DEBT SYNDICATION PROCESS:
STEP 1: BUSINESS OPPORTUNITY IDENTIFICATION
Under this step, the business opportunity is identified. This business opportunity may arise when the Investment Bank approaches the client company or the client company approaches the Investment Bank. In majority of the cases, latter happens. The Client company approaches the Investment Bank with an offer letter / proposal to raise a loan for them.
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STEP 2: DUE DILIGENCE
After the receipt of the letter, before confirmation the Investment bank carries out internal due diligence from its end. Here the task of the Investment Bank becomes relatively simple if the client is an Already existing one. However in the case of a new client, proper credit rating needs to be done. For this purpose various credit rating agencies are approached, information is found out from other sources. After the analysis of this information, if the company is found be worthy, then the offer is accepted. The entire due diligence process is carried out by the credit rating committee of JM Financial, which is a Board Level Committee.
STEP 3: MANDATE LETTER
This is a confirmation letter by the company as regard the appointment of the Investment Bank. In this letter the company also mention the amount of loan required, the desirable interest rate, fees of the Merchant Banks, etc. the entire procedure up to the receipt of Mandate Letter Takes 2-3 Working days. Please take note that it is not necessary that Investment Banks has to be a soul Investment banks to the syndication. There can also be co- Investment Bank to the syndication process. However this does not make any different to the process of syndication
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STEP 4:
After the receipt of the appointment Letter / Mandate, the following are the activities undertaken by the Merchant Bank: (a) The bank based on the requirement of the company decide the kind of loan to be raised. In India there are 2 loan Markets. Rated and non rated Markets. Rated markets is the bond market, whereas the nonrated market is the Banks Loan Market. The former is not very popular in the country. Bank loan market is the one which is widely used the various companies. One of the biggest reasons as to why companies prefer non- rated market, is due to the case of availability of loan at lower rate of interest compared to the rated market. Also the rules and regulations in the non-rated market are far less compared to the rated market. This is the reasons why the client company as well as the Investment Banks, both prefer the non- rated market.
(b) After deciding the type of market, the investment bank now proceeds to find out whether the Balance sheet and the financial statements can support the amount of loan required by the company. Here the investment bank undertakes a detailed study of the past performance of the company and compares it with the present performance. The financial statements of the company are the most important tool used to find out this information. (c) After determining the quantum of loan that can be supported by the company as per its statement of accounts, the Merchant banks proceed
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to find out the possible banks that would be interested in funding the requirements. For this purpose they may approach the banks which the client companies may specify in case of no specification, they approach the banks that have a direct dealing with them. The banks are given various details about the nature of company, amount of loan, expected rate of interest, etc. (d) After the banks have been approached, the work of investment banks is more or less complete. Now onwards they would merely act as communicating links between the lending bank and the client company. I. The books take approximately 40-45 days to give their acceptance of the
loan. During this time in co-ordination with the Merchant bank, the lending bank words out the Credit worthiness of the company. Various statistics of the financial performance of the company. This gathered about financial performance of the company. This information is deeply studied and various ratios are found out, sensitivity testes are conducted, etc. also one of the most important aspect is the valuation of the borrowing company, assessment of the repayment capacity based on the revenues, etc.
II. All this while the Investment Bank is in constant co-ordination with the
lending bank and the borrowing company. They make available to the lender all the information required by it and try their best make sure that the loan is granted.
III. After the bank is satisfied that the company is worthy of the loan, the bank
proceeds with the legal formalities. It is made sure that the entire loan is secured by collaterals, guaranteed and everything company through the merchant bank. 62
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IV. The company gets the documents scrutinized form its end, with the help of
solicitors, etc. if the terms and conditions of the banks such as interest rates, repayment period are acceptable, than the company givers its conformation.
V. Thereafter forms are filled, papers are signed and the loan is finally
disbursed.
VI. After the completion of all the formalities, the Investment bank is paid the
fees. This is a percentage of the total loan disbursed. Investment generally undertakes debt syndication for Tier II companies, because these are the companies who are not blessed with the procedures, formalities and contacts to get loans raised. Generally the tier I companies prefer to undertake debt syndication or raising of borrowed capital by the internal departments which consists of personnel specializing in this field.
1.15 BUY BACK OF SHARES Before we move on to see the buy back process and services of Investment banks in the buy back process, let first understand what buy back of shares means?
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Buy back is a phenomenon under which the company’s purchase back the shares it has previously sold to the public. In order to fund this activity the company makes use of the free- serves and the surplus with itself. There are a lot of rules and regulation enacted by SEBI to make sure that there are no manipulation in the buy back process and investor’s rights are protected. Therefore a lot of responsibility is assigned to an investment bank in initiating the entire buy back process. Let us move on to see the role of a Merchant Bank in the Buy Back process: STEP 1: BUSINESS OPPORTUNITY INDENTIFICATION
This step is the same as in the previous case study where the capital client company approaches the Investment bank asking for assistance and advice in completing the buy back process. STEP 2: WORKING OUT FINANCIALS
Here the Investment bank after receipt of the Mandate starts its work. It determines the exact amount of shares the company can buy back from the public. Decides the rates at which they can bought back and check whether the financial statements of the company and various SEBI rules regarding the buy Back permit Buy Back, otherwise the company is likely to attract heavy penalty.
STEP 3: PREPARING OFFER LETTER
Once all the financial are worked out and the buy back price decided, The Investment bank proceed with drafting the letter of offer. Before the drafting can be started, the company and the investment Bankers have to get a resolution
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passed by the Board and Shareholders in an EGM. Thereafter decided the buy back date buy back period. After completing all these formalities, they can start with the drafting of LOF. STEP 4: FILING OF LOF WITH SEBI
Once the LOF is drafted, it has to be field with the SEBI within the prescribed time period after the passing of the resolution in the EGM and the Board Meeting. STEP 5: MODIFICATIONS IN LOF
Once the LOF is filed with the SEBI, it gives its comments and modification on the same. Within twenty-one days from the date of submission of the draft letter of offer, SEBI specifies modifications, if any, in the draft letter of offer. The investment banker and the company shall carry out such modifications before the letter of offer is dispatched to the shareholders. STEP 6: DESPATCH OF LOF
After the official nod is received from SEBI, the company and Merchant Banks proceed to dispatch the OLF to the shareholders.
STEP 7: STATUTORY ADVERTISEMENT
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After dispatching the LOF to the shareholders, the company and the Merchant Banks do to the statutory advertisement to provide information to the shareholder about the buy back. STEP 8: OFFER PROCEDURE
The offer for buy back shall remain open to the members for a period not less than fifteen days and not exceeding thirty days. The date of the opening of the offer shall not be earlier than seven days or letter than thirty days after the specified date. The letter of offer shall be sent to shareholders so as to reach them before the opening of the offer. In case the number of shares offered by the share holders is more than the total number of shares to be bought back by the company, the acceptances per share holder shall be equal to the acceptances tendered by the share holders dividend by the total acceptances received and multiplied by the total number of shares to be bought back. The company shall complete the verifications of the offers received within fifteen days of the closure of the offer and the shares lodged shall be deemed to be accepted unless a communication of rejection is made within fifteen days from the closure of the offer. STEP 9: MAINTAING ESCROW ACCOUNT
An Escrow account is the mechanism put in by SEBI to protect the shareholders and hive them security. The company shall by way of security for performance of its obligations, on or before the opening of the offer, deposit in an escrow account a sum equivalent to the total buy back amount.
The escrow account shall consist of : 66
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(a) Cash deposited with a scheduled commercial bank or; (b) Bank guarantee in favor of the merchant banker; or (c) Deposit of acceptable securities with appropriate margin, with the merchant banker, or (d) A combination of above mentioned three points. The SEBI in the interest of the shareholders may in case of non-fulfillment of obligations under the regulations by the company, forfeit the escrow account either in full or in part. The amount forfeited may be distributed pro rata amongst the share holders who accepted the offer and balance, if any shall be utilized for investor protection. STEP 10: PAYMENT TO SHAREHOLDERS
The company shall immediately after the date of closure of the offer open a special account with a bankers and deposit therein, such sum as would, together with the amount lying in the escrow account make-up the entire sum due and payable as consideration for buyback and for this purpose, may transfer the funds from the escrow account. The company shall within seven days of time make payment of consideration in cash those shareholders whose offer has been accepted or return the share certificates to the security holders.
STEP 11: EXTINGUISHMENTS OF CERTIFICATE
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The company shall extinguish and physically destroy the security certificates so bought back in the presence of a Registrar or the investment banker, and the statutory auditor within seven days from the date of acceptance of the securities. The securities offered for buyback if already dematerialized shall be extinguished and destroyed in the manner specified under securities and exchange board of India (Depositories and Participants) Regulations, 1996 and the bye laws framed three under. The company shall furnish a certificate to the SEBI duly verified by a) The registrar and whenever there is no registrar through the merchant banker; b) Two whole-time Directors including the Managing Director and; c) The statutory auditor of the company, and compliance within seven days of extinguishment and destruction of the certificates. The particulars of the share certificates extinguished and destroyed shall be furnished to the stock exchange where the shares of the company are listed, within seven days of extinguishments and destruction of the certificates. The company shall maintain a record of the share certificates, which have been can celled and destroyed.
1.16 MERGERS AND ACQUISITIONS 68
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Mergers and Acquisitions, commonly referred to as M & A, are 2 separate and distinct activities. Many people confuse them to be synonymous, however they are distinct from 1 another. Merger happens when 2 companies come join together and from a separate entity. This could be a company with a new brand name, new business, etc. Acquisition happen when one company has been taken over by another company. This means that the acquiring company after the takeover controls the management of the acquired company, whereas this is not the case in mergers. In case of mergers and acquisition, investment bankers may act from the sell side or the buy side. The investment bankers collect data on various companies, which are looking for mergers. They also identify potential targets of takeover / acquisition, which could benefit their client. The main role of an investment banker in an M & A is to make sure that his client is not cheated. The investment banker through various analyses finds out the minimum amount that his client should get. Thus an investment banker tries to protect the interest of his client from the other party. In brief the M & A process can be as follows: Step 1: Business Opportunity Identification Step 2: Receipt of Appointment Mandate. Step 3: identify the potential targets for merger or acquisition as the case may
be.
Step 4: Due Diligence of the 2 nd party.
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Investment Banking Step 5: Proposal on behalf of the client for merger or acquisition as the case
may be. Step 6: Receipt of confirmation from the 2 nd party for regards merger or
acquisition. Step 7: Valuation of the client company as well as the 2 nd company. Step 8: Drafting the agreement Step 9: meeting of the client with the second company. Step 10: Negotiation between both the parties and try to reach a conclusion. Step 11: Make changes in the agreement, prepare final agreement and get it
signed. Step 12: Assist in the formation of a new entry in case of merger and assist in
the process of investment in the case of acquisition. This is how an investment banker helps in the M & A process. Due to shortage of time, only the above mentioned information could be gathered for M & A.
1.17 VENTURE CAPITAL FUNDING 70
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It is popularly believed that venture capitalists fund only established players and proven products. There is a lot of cynicism amongst many about all type that private equity and venture capital is getting in India of late. The national venture capital association defines venture capital as: “Money provided by professionals who invest alongside management in young, rapidly growing companies that have the potential to develop into significant economic contributors.” Investment bankers provide not only financial, but also, managerial (technical, marketing and HR), support to achieve success. This support is lent in many forms by private funding and incubation organizations such as venture capitalists. Clients looking for setting up a venture capital fund take help and advice of the investment banker on the various issue from selecting a business proposal to legal framework, rule and regulations. What investment bankers look for while funding a business
The following paragraphs broadly the various steps of the evaluation process.
Initial Screening
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Investment bankers are in the business of making more the then average returns for their clients interested in venture capital funding and only the proposals which can match or exceed the VCs expectation will get an attention from them. Thus initial screening is a step in which the venture capitalist reaches an initial decision to investigate the investment (or not) The initial screen is a cursory glance at the business plan determine whether or not the proposal fits within the client’s areas of expertise. Investment bankers carry out initial screening of all projects on the basis of some broad criteria. For example, the screening process may limit projects to areas with which the venture capitalist is familiar in terms of product, technology or market scope. The size of investment, stage of financing and geographical location could be as the broad screening criteria. Detailed Business Plan
If the plan manages to clear the initial screening round then the investment bankers call for the detailed business plan from the entrepreneur. This business plan is the main tool with the help of which client would make up his mind. Thus the entrepreneur should present clarity of thinking about the business in the plan as the “Surprises can be great for parties, but potentially could be fatal for businesses.”
Due Diligence 72
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In the next and the help most important phase, due diligence is conducted by the client with help from investment bankers to verify the accuracy of the statements made by the entrepreneur. The two main types of due diligence conducted are business and legal. The legal due diligence involves verification of the documents by the lawyers of the VC. These documents include Memorandum and Articles of the Association, important contracts, patents, copyrights, et cetera. Business due diligence involves looking at the quality of people, quality of business and the quality of investment. Quality of people is one of the most important criteria. There is unanimity among theorists that venture capitalists prefer a grade A team with a grade B idea to a grade B team with a grade A idea. However, how the quality of team is evaluated is a source of controversy. Many feel that the integrity of the team members is the most important criterion. Past research shows that trustworthiness, enthusiasm and expertise of the entrepreneur are the most important factors considered by the VCs. It has also been that about 50-60 per cent of the projects which are seriously considered for financing but are ultimately rejected is due to the factors related to the entrepreneur. The other major consideration is quality of business. Some investment bankers, specially the early stage ones, may not give a lot of importance to details; however, the idea must necessarily and clearly signify a distinct and unique competitive advantage. Generally, market potential and attractiveness are an integral part of a marketing plan.
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Though visibility and transparency in a business may not necessarily inverse its attractiveness, it is more of a necessity. One of the most important considerations for investment bankers while judging an investment proposal is clarity of the exit mode and the expected return from the project, which is quality of the investment. This is because the VC is ultimately a fund and they (like mutual fund mangers) need to manage their portfolio to get maximum return.
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ISSUE OF TERM SHEET Finally, if the investment banker is positive after the due diligence, he will issue a term sheet which is an indication that he seriously looking at the proposal. It is pertinent to note that the term sheet is not the final document, but only a basis for further negotiations. So, behind those mind boggling returns lies serious evaluation. Apart from luck and being in the right business at the right time, venture capitalists must also be given due credit for the detailed evaluation that they carry out before deciding to invest.
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CHAPTER 2 RESEARCH METHODOLOGY Exploratory research design is used to perform the study. The random sampling method used to collect the primary data from the customers in Mumbai city. The sample of 100 respondents was collected. Both primary and secondary data is used to perform the study. A questionnaire was prepared for customer’s survey. Introductory question included all multiple choice / multiple response type of questions. Main body of customer questionnaire included objective of the research study which was drafted in English containing Likert-scaled items scoring from 1 (strongly disagree) to 5 (strongly agree) to measure various mall shopping factors. The main purpose of the research was to confirm whether items loaded correctly to the corresponding factors as identify by previous research. Through objectives, hypothesis is tested to find out the relationship between factors affecting towards malls shopping. The study falls under the category of descriptive research and uses survey method. Descriptive research includes survey and fact finding enquiries of different kinds..it is description of state of affairs as exists at present. To collect the necessary information, carious parameters were developed with the help of literature. The responses to these parameters were gathered, coded, tabulated and analyzed. To measure the intensity of parameters close ended questionnaire was used. To measure the attributes were measured on a point scale and the final score has calculated by using weighted ranking method.
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DATA COLLECTION METHOD
Primary data Primary data are those which are collected for the first time and which could be original in character. There are several methods of data collection, be particularly in descriptive researches. This includes following methods. Observation
method,
Interview
method,
Collection
of
data
through
questionnaires, such as warranty cards, contract analysis, projective techniques, depth interviews and systems audits etc. A structured questionnaire was built in correlation with objective of research and hypotheses. Thus data using questionnaire was collected from shoppers. The total sample size decided by researcher was 100 across Mumbai city. All clusters namely, students, service class, business class, professional and others was considered for the same. Research had made an attempt that the sample size was adequate, representative and estimator with sufficiently high precision. I had collected the primary data by survey and questionnaire method.
Secondary Date Secondary data represents a very powerful tool for the researcher as entire research work is carried out on the basis of secondary data. It is nothing but the backbone of research work. Secondary data is the one which has already been collected and analyzed by someone else. Usually this analyzed data is available in the published from.
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The concept regarding consumer behavior and other literature were taken from the different reference books and text books. The articles which were based on the related topic were taken from newspapers & magazines which were published. Literature from the research journals were taken on have an insight of the research problems so that the gap in this research was identified and hypotheses was formed. Last but not the least Literature from Websites was also reviewed. The data will be collected from shoppers responses were analyzed by using appropriate statistical tools. Thus the research adopted for the study will be Quantitative Descriptive Cross-sectional design to cover the various factors of the study. Sampling Unit : The sampling unit was identified by the researcher before
selection of a sample. A sampling Unit may a natural geographical unit such as state, a district, a village. It may be a social entity such as a family or a school. It may also be an individual. I had collected the primary data by using 100 sampling units.
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CHAPTER 3 DATA ANALYSIS AND INTERPRETATION OF DATA
1. Are you aware of the following investment avenues ? A. Safe / Low risk investment avenues:
Operations
Total
Percentage
Saving account
18
18%
Bank fixed deposits
29
29%
Public provident fund
16
16%
National saving
15
15%
Post office saving
10
10%
Government securities
12
12%
certificate
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Investment Banking
Safe/Low risk investment avenues goverment securities
10%
12%
saving accounts
15% 18%
bank fixed deposite
public provident fund
16% 29%
national saving certificate
post office
OBSERVATION:
According to the above pie-chart the more number of investment is done in fixed deposit i.e. 29%, while the less numbers of investment is done in saving accounts i.e. 10%.
B. Moderate risk investment avenues 80
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Options
Total
Percentage
Mutual funds
31
31%
Life insurance
45
45%
Debentures
13
13%
Bonds
11
11%
Moderate risk investment avenues
Mutual funds
11% 31%
13%
Life insurance
Debentures
45% Bonds
OSERVATION:
According to the above pie-chart the more numbers of investment is done in life insurance i.e. 45%, while the less numbers of investment is done in bonds i.e. 11%.
C. High risk investment avenues: Options
Total
Percentage 81
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Equity risk market
45
45%
Commodity market
35
35%
FOREX market
20
20%
High risk investment avenues
Equity risk market
20%
Commodity market
45%
FOREX market
35%
OBSERVATION:
According to the above pie-chart the more numbers of investment in traditional avenues is done in real estate i.e. 63%, while the less numbers of investment is done in chit funds i.e. 10%
D. Traditional investment avenues Options
Total
Percentage 82
Investment Banking
Real estate
63
63%
Gold/Silver
27
27%
Chit funds
10
10%
Traditional investment avenues
Real estate
10%
Gold/Silver
27% 63%
Chit funds
OBSERVATION:
According to the above pie-chart the more number of investment is done in private equity investment i.e. 41%, while the less numbers is in hedge funds i.e. 10%.
E. Emerging investment avenues: Options
Total
Percentage
Virtual real estate
29
29%
Hedge funds
10
10% 83
Investment Banking
Private equity investment
41
41%
Art and passion
20
20%
Emerging investment avenues
Virtaual real estate
20% 29%
Hedge funds
Private equity investment
Art and passion
10% 41%
OBSERVATION:
According to above pie-chart the more numbers of investment is done in private equity investment i.e. 41%, while the less numbers is in hedge funds i.e. 10%
2. In which sector do you prefer to invest your money ? Options
Total
Percentage
Private sector
23
23%
Government sector
57
57%
Public sector
17
17%
Foreign sector
3
3% 84
Investment Banking
Money prefered to investment
Private sector
3% 14%
24% Government sector
Public sector
Foreign sector
59%
3. What are your saving objectives ? Options
Total
Percentage
Children education
24
24%
Retirement
13
13%
Home purchase
29
29%
Children’s marriage
20
20%
Health care
14
14%
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Investment Banking
Saving objectives
Children education
14% 24%
Retirement
Home purchase
20% 13%
Children's marriage
29%
Health care
OBSERVATION:
According to the above pie-chart the more numbers of saving objectives is in home purchase i.e. 29%, while the less number is retirement i.e. 13%. 4. What is your investment objectives ? Options
Total
Percentage
Income and capital preservation
15
15%
Long term growth
32
32%
Growth and income
43
43%
Short term growth
10
10%
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Investment Banking
Investmet objectives
Income and Capital
10%
15%
Long term Growth
32%
43%
Growth and Income
Short term Growth
OBSERVATION:
According to the above pie-chart the more number of investment objectives is in growth and income i.e. 43%, while the less number is in short-term growth i.e. 10%.
5. What is the purpose behind investment ? Options
Total
Percentage
Wealth creations
32
32%
Tax saving
16
16%
Earn returns
30
30%
Future expense
22
22%
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Investment purpose
Wealth creation
22% 32%
Tax saving
Earn returns
30%
Future expense
16%
OBSERVATION:
According to the above pie-chart the more numbers of investments purpose is in wealth creation i.e. 32%, while the less numbers is is tax saving i.e. 16%.
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6. Do you have a formal budget for family expenditure ? Options
Total
Percentage
Yes
79
79%
NO
21
21%
Budget for family expenditure
4% Yes
No
96%
OBSERVATION:
According to the above pie-chart the more numbers of people have budget for family expenditure i.e. 96%, while the less numbers is 4%.
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7. At which rate do you want your investment to grow ? Options
Total
Percentage
Steadily
45
45%
At an average rate
29
29%
Fast
26
26%
Growth of investment
Steadily
26% Average rate
45%
29%
Fast
OBSERVATION:
According to the above pie-chart the more numbers of people want their growth of investment to be steadily i.e.45%, while the less numbers of peoples want their growth of investment to be fast i.e. 26%.
8. Which factor do you consider before investing ?
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Options
Total
Percentage
Safety of principle
31
31%
Low risk
19
19%
High risk
29
29
Maturity period
21
21%
Fcator before investing
Safety of principle
21% 31%
Low risk
High risk
29% 19% Maturity period
OBSERVATION:
According to above pie-chart the more numbers of factors before investing is in safety of principle i.e. 31%, while the less numbers of factors before investing is in low risk i.e.19%.
9. Do you invest your money in share market ? (through a DEMAT A/C) Options
Total
Percentage
91
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Yes
72
72%
No
28
28%
Invested in share market
Yes
28%
No
72%
OBSERVATION:
According to above pie-chart the more number of peoples invested in share market is 72%, while the peoples who does not invested in share market is 28%.
A) If yes: Imagine that stock market drops after you invest in it then what will you do ? Options
Total
Percentage 92
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Withdraw your money
31
31%
Wait to increase
24
24%
Invest more in it
18
18%
If yes
Withdraw your money
19%
45%
Wait to increase
36% Invest more in it
OBSERVATION:
According to above pie-chart the more numbers of people said yes will withdrawn their money i.e. 42%, while the less numbers is 25%. 10. What is your source of investment advice ? Options
Total
Percentage
Newspaper
21
21%
News channels
26
26%
Family friends
06
06%
Internet
34
34%
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Investment Banking
Advisors
13
13%
Magazines
00
00%
Source of investment advice
News paper
24% 39%
7%
30%
News channels Family and friends Internet
OBSERVATION:
According to above pie-chart the more numbers of peoples had sources of Investment advice in internet i.e. 34%, while the less numbers is of magazines i.e.0%.
11. Do you make investment yourself or take help of investment bankers ? Options
Total
Percentage
By yourself
17
17%
Take help of an investment bankers
83
83%
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Decision in investment
17% By yourself
Take help of an investment bankers
83%
OBSERVATION:
According to the above pie-chart the more numbers of peoples takes help of investment bankers i.e. 83%, while the less numbers of peoples invest themselves in market i.e. 17%.
12. How did you come to know about him/her (advisor) ? Options
Total
Percentage
Internet
46
46%
Friends and Family
11
11%
Newspaper
28
28%
News channel
15
15%
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Knowing of advisor
Internet
13% 24% Friends and Family
18% Newspaper
News cahnnel
45%
OBSERVATION:
According to above pie-chart the more numbers of peoples get to know about the investments bankers by newspaper i.e.45%, while the less number is 13%.
13. Do you feel investments bankers are helpful in making good investments ? Options
Total
Percentage
Yes
86
86%
No
14
14%
96
Investment Banking
Helpful in making good investment
14%
Yes
No
86%
OBSERVATION:
According to above pie-chart the more numbers of peoples feel investments bankers are helpful in making good investments is 86%, while the less numbers of people does not feel investment bankers are helpful in making good investments i.e. 14%
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98
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99
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100
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101
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102
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103
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104
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