Asia Investment Banking – Activity
In the last decade, Corporate Finance activity has grown exponentially in the Asia and Asia Pacific region. This is driven by increased regulation, and thus a safer investing climate for global investors. With this, businesses across industries are able to tap onto advisory and capital raising capabilities of the global banks. We even see local banks such as Japan’s Nomura taking international limelight as they took over Lehman’s investment banking business during the recent economic crisis. Many companies in China are also highly under-leveraged and have had organic growth over decades. They are now gradually tapping onto new capital through debt and equity offerings to fund expansion plans.
Asia Investment Banking – Corporate Finance
Most banks serve their clients by working in Sector Teams, which span across Industries. The more common Sector Teams are Healthcare, Media and Telecommunications, Industrial, Commodities, Real Estate and Financial Institutions. In Asia, teams are not so clearly defined and are often segregated into country teams. For example South East Asia Teams, Japan Teams or North Asia Teams. Depending on client needs, the banks offer advisory services, which range from Mergers & Acquisitions to Equity or Debt Financing to share sales. Very often, Bankers get referred to clients through their Wealth Management Division, which handles assets of high net worth individuals, who are also often CEOs and business owners. In countries like India and China, locals take pride in their ancestry and family trees, therefore creating a barrier to entry for less connected banks.
Asia Investment Banking – The Players
Bankers raising capital belong to the sell side because they sell securities to raise capital for companies. On the other side of the table we see the buy-side, made up of Private Equity Funds, Hedge Funds, Funds of Funds, Other Institutional Buyers and in the case of the public share offering/ Initial public offering, the buyers can be members of the public as well. In between these two sides we may have brokers who underwrite the public shares to mitigate some risk. Playing an important but secondary role are also the rating agencies such as Moody’s and Standard and Poor, whose ratings affect the pricing of the securities sold. In Asia, the definition of funds is less clearly defined and we often see hedge funds taking up private equity products as well.
Asia Investment Banking -Career & Outlook
Asia jobs very rarely pay higher than that of Corporate Finance Bankers. Needless to say, graduates in Asia strive for such a position, especially at international banks. Many pursue their MBA or Chartered Financial Analyst certificates for a chance at an Interview. The typical hierarchy at a Bank is Analyst- Associate – Associate Director – Director – Managing Director. Unlike the US or UK, you do not need an MBA to rise up the ranks, although it is preferred. Many analysts join the bank upon graduation and get promoted without going to business school for an MBA.
Asia Investment Banking -Conclusion
Despite the negative sentiment on Wall Street, Investment Banking is still an extremely lucrative industry with huge potential, considering the size of untapped markets and high growth projections in Asia and Asia Pacific.