by Brian DeChesare Comments (415)

Investment Banking in India

NOTE: This is a new version of a previous article on Investment Banking in India.

The first version was written in 2009, and a lot has changed since then, so I wanted to write a new version and include more recent developments.

Also, the story in that original version was a bit unrealistic, so I wanted to describe the more likely paths into the industry.

Does it ever make sense to accept a back-office role over a front-office one?

In 99% of cases, no.

But one market where candidates often think otherwise is India.

Banks there try to ‘sell’ you on back and middle-office roles by offering higher base salaries and claiming that these roles lead to solid exit opportunities.

But you should be skeptical.

To get the full story, I recently spoke with a reader who broke into investment banking and now works at one of the top banks in India:

Breaking In: Out of 1.3 Billion People, How Many Want to Be Bankers?

Q: Can you walk us through your story?

A: I attended a top IIT (Indian Institute of Technology), did a few internships, including one in the back office of a bulge-bracket bank, and I became interested in corporate finance like that.

But there isn’t that much on-campus recruiting for IB roles, even at the top IITs – banks mostly want candidates from the top IIMs (Indian Institutes of Management) instead.

I recruited at a few banks, consulting firms, and prop trading firms, but the on-campus process is a circus because you only have a few hours to interview with different firms – so if you assess your odds incorrectly, you could easily walk away with nothing.

I didn’t win any offers from on-campus recruiting, so I began a hardcore networking effort and contacted almost every bank in the country.

I went through 8+ interviews with some banks, but I still couldn’t win an offer.

But my LinkedIn networking finally paid off: I won interviews from a message I sent to one banker, and I went through the process and eventually won an offer at a top domestic bank.

Q: Some people say that “networking doesn’t work in India,” or that it’s “impossible” to break in.

A: The first statement is false. Networking works well if you do it properly.

And if you’re not at an IIM, you pretty much have to network to get in.

It’s not “impossible” to win IB offers, but it is extremely difficult because there are few openings: The top banks in the country have only a few dozen people in their IB groups, and each group might hire only a few people each year.

Altogether, there are fewer than 2,000 front-office roles in the entire country, and that’s if you define “front office” quite broadly (i.e., not just IB, but also related roles such as Big 4 Transaction Services, equity research, S&T, etc.).

Banks recruit candidates from:

  • The Top IIMs – They want candidates who have completed a Bachelor’s degree and then studied at an IIM, and ideally one of the top two: IIM-A (Ahmedabad) and IIM-C (Calcutta). A few recruiters will also go to IIM-B (Bangalore), which “places second.”

IIM candidates join banks as Analysts and earn solid compensation.

  • The Top IITs – Banks try to get undergraduate students at the IITs to accept back-office or “knowledge process outsourcing” (KPO) roles; there aren’t many front-office opportunities at this level.
  • CAs (Chartered Accountants) – The CA program is selective and well-regarded by professionals in India. Some banks, such as BAML, have recruiting programs specifically for CAs.
  • Non-IIM/IIT Schools – If you’re in this category, you’ll have to network aggressively and target lower-tier banks that work on smaller deals.

Q: Why are there so few positions?

And what options are there if you don’t get into IB?

A: There aren’t many front-office roles because banks focus on back-office and KPO-style work here.

India is in the top 10 economies worldwide, but there isn’t much deal activity compared with similarly-sized economies like the U.K.

If you’re an undergrad, back-office or KPO roles are the most common alternatives to front-office IB jobs.

In those roles, you’ll mostly work on the first drafts of pitch books and send them to IB Analysts in NY and London for corrections and edits.

On my campus, dozens of students won back-office operations roles at various banks.

By contrast, only a handful of students across all the IITs won front-office IB roles.

Banks like to lure students in with higher compensation; these back-office roles at international banks sometimes pay higher base salaries than front-office IB roles at domestic banks.

It’s easier to win consulting jobs if you’re at a top university here: Around 100 to 150 students per year across the IITs win and accept roles at consulting firms.

Since it’s feasible to move from consulting into private equity, many people see it as a better option than banking.

Q: What about nepotism? Does that explain the difficulty of winning these roles?

A: Not really. If you have a relative at a high level, yes, that could help you win an internship.

But full-time roles are a different story: If you go through 10 rounds of interviews and meet everyone multiple times, your C-level uncle won’t be able to overcome a “No” vote from 3 senior bankers.

And since each bank hires few Analysts, it would be obvious if someone unqualified won an offer.

But that same person would be much harder to detect in an Analyst class of 150 in New York.

Q: OK. And what about interviews themselves? What should you expect?

A: There was a heavy focus on technical questions – more so than in places like London.

Many banks here assume that if you can answer the technical questions effectively, you’ll be able to do the job effectively, so they sometimes pay less attention to “fit.”

They also ask about macroeconomic indicators, such as the CPI of India, the expected GDP growth rate, and the rate of inflation.

Finally, banks expect you to know about recent deals in the market and the domestic and international banks that have advised on them.

I did not receive case studies or modeling tests because I was applying with no full-time work experience.

But consulting roles require case studies, and almost all private equity funds give you modeling tests.

On the Job in India: How the Domestic Banks Won

Q: Thanks for that description.

What is the investment banking industry there like?

A: A long time ago, many of the international bulge-bracket banks here had joint ventures with domestic banks.

But that changed over time, and most domestic banks ended these JVs and began operating independently (e.g., Kotak with GS and JM Financial with MS).

Deal activity is driven by ECM rather than M&A, and many IPOs are quite small by the standards of Western markets ($80-$100 million USD).

Most of the international bulge-bracket banks and “In-Between-a-Banks” have a presence here.

If there’s a large M&A deal, the companies involved sometimes hire one international bank to gain better access to worldwide relationships and capital.

Of the elite boutiques, Rothschild, Lazard, Evercore, and Moelis also operate here.

A few of the top domestic banks include Kotak and JM Financial.

Q: Thanks for that. Are there any differences in the deal process, valuation, and analysis?

A: Not really. As with other emerging markets, sometimes you’ll use higher discount rates because of geopolitical and country-specific risks, but accounting and valuation are similar.

One trend is that companies here have been trading at higher and higher multiples – you’ll see multi-billion-dollar companies trading at 70x P / E multiples sometimes.

Those figures imply extremely high future growth, which many view with skepticism.

Q: Yeah, those numbers sound like “private tech startup multiples” to me.

How does the compensation differ between domestic and international banks?

A: At the bulge-bracket banks, you’ll make around $100K USD total as an Analyst, and maybe a bit more than that (with a 50/50 split between base salary and bonus).

That’s a discount to pay in NY and London, but $100K also goes much further in India.

Domestic banks pay more like $40K – $50K to Analysts, but there’s a wide variance among different firms.

Many people are tempted to accept KPO or back-office roles at the international banks because they often pay higher base salaries than domestic banks do, at least at the undergraduate level.

Some large banks don’t have Analyst programs for undergraduates: They only hire IIM grads for these positions.

Meanwhile, other banks have “long-term internships,” where you might work for 6+ months to prove yourself before winning a full-time offer.

(NOTE: Compensation figures as of 2017.)

Q: Thanks for explaining all that.

What are your long-term plans, and what do most bankers there do?

A: Almost every banker in India wants to get into private equity, which has been booming here.

There are no real hedge funds, and mutual funds are highly regulated, so PE is the most attractive option.

But there are not that many buy-side roles, and they’re even more difficult to win than IB roles. So, in practice, many bankers continue in banking or move overseas.

Just like everyone else, I also want to get into private equity in a few years.

My plan is to work in PE for a few years, complete an MBA in the U.S., and then return home to continue in private equity.

Q: Great. Thanks for your time, and good luck!

A: Thank you. My pleasure!

M&I - Brian

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys memorizing obscure Excel functions, editing resumes, obsessing over TV shows, traveling like a drug dealer, and defeating Sauron.

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  1. Saurabh Mittra

    Hello Brian,

    Can you please cover the Risk Manager role (in FRM context) in BB & Boutique IB & HFs. How to break in ( MBA or FRM route), the pay scale, promotions and exit opportunities. You have covered a lot on valuations, M&A deals and Capital Markets in IB/PE articles. However, Risk Mgt. is what I want you to cover. BTW i am looking forward to make a long term career in Risk Mgt. in IB/HF.

    1. We don’t have anything on risk management, but hope to cover it in the future.

      1. Saurabh Mittra

        Okay! but please do cover in the future. Looking forward to it.

        Thanks

  2. Very good insight about India IB industry.

    1. Thanks for reading

  3. Aman Sachdeva

    Hi Brian,
    I want to contact you personally, to get an advice regarding my career, can I get the e-mail id or a mail from you just so I can put forward my query?

    Thanks

    1. Feel free to reply to one of our newsletters or email announcements… or leave a comment here

  4. Abhishek

    Very, very poorly researched article.

    In India, if you look at the volume of M&A deals, EY tops the table. And the author has completely missed banks such as O3. Yes bank and ICICI don’t even do M&A, they are into IPOs.

    1. EY is not a dedicated investment bank, and typically M&A league table rankings are done by total deal volume, not # of deals. If we ranked banks by the # of deals, middle-market firms would outrank the bulge-bracket banks in some markets.

      I’ve deleted most of the references to specific banks.

      1. Brian, While I enjoy your articles for their accuracy (I have followed this site for nearly 9-10 yrs now), I’m afraid this article has lot of inaccuracies.

        Indian Investment Banking industry is driven by ECM rather than M&A. Bulk of revenues are earned by banks on the ECM – IPOs, Follow ons and Block transactions rather than M&A advisory. Hence apart from the domestic heavyweights like Kotak, Axis, ICICI Securities and JM (” Indian Bulge bracket”), the key foreign banks include Citi, MS, BAML. JP Morgan, HSBC and Credit Suisse are also active but names like Goldman Sachs, UBS and Deutsche are more active on the cross border M&A side of it and have minimal ECM presence. In fact there was a huge controversy recently in one of the follow-ons of Yes Bank (USD 1bn raise), which was allegedly mismanaged by GS and the deal failed. So if you see the fee league tables, you would only see the above banks dominating. Boutiques like Avendus, Moelis, Rothschild also do fairly well in mid market M&A in India and so does E&Y. Barclays recently shut their ECM shop in India while GS has minimal presence.

        As far as pay is concerned, back office doesn’t pay 3x of domestic banks. Don’t know which bank your source is referring to. Undergrad hiring in Indian banks is non-existent and most of them are recruited out of B-Schools (mostly the top 4-5 IIMs). Indian banks start at ~ $30k fixed plus a 70% variable, while Foreign banks start at ~$50k fixed plus an equal variable. If you adjust for PPP, these figures would be more like ~$100k

        Banking hours are about 70-75 hrs a week in Indian banks while its the standard 90 hr week for foreign banks (smaller teams and hence more pressure). So many kids out of school prefer Indian banks sometimes for the lesser hours and better lifestyle

        P.S – I have been working in this industry for the past 10 yrs and do a lot of recruitment from schools. Currently I work with an Indian Bulge bracket.

        1. Not sure I really understand your comment… did you read the old version of this article or the revised one?

          1) I deleted references to most of the banks named in the article. I have no idea where we say that the IB industry is driven by M&A. Does the following passage in the article contain that quote or implication anywhere?

          “India is the textbook example of a market where the international bulge-bracket banks dominated at first, but have lost more and more ground over time.

          That trend began in 2006 when Kotak ended its joint venture with Goldman Sachs, and it continued in 2007 when JM Financial ended its joint venture with Morgan Stanley and bought its equity in the investment banking unit.

          Then, the financial crisis disproportionately hurt the international banks and allowed the domestic banks to expand and gain market share.

          Most of the international bulge-bracket banks and “In-Between-a-Banks” have a presence here.

          Companies here often hire at least one international bank on larger deals to gain access to superior worldwide relationships and capital.

          Of the elite boutiques, Rothschild, Lazard, Evercore, and Moelis also operate here.

          A few domestic banks include Kotak and JM Financial; I won’t mention others because these lists always tend to create controversy.”

          2) On your pay figures – um, didn’t we quote $100K for the international banks? As for $30K fixed + 70% variable at the domestic banks, that comes to $51K. The exact quote in the article is:

          “Domestic banks pay more like $40K USD to Analysts, but there’s a wide variance among different firms.”

          An average of $40K with “wide variance among different firms” to me implies that $51K might be within that variance.

          For back office roles, other sources said ones at foreign banks pay more than front-office roles at domestic banks do. If it’s not 2x-3x more, then what is your estimate?

          3) I think the article strongly implied this statement:

          “Undergrad hiring in Indian banks is non-existent and most of them are recruited out of B-Schools (mostly the top 4-5 IIMs).”

          I’m happy to accept criticism or change around these figures, but I’m just not sure how to respond considering we already fixed the major issues with specific firms.

          1. Hi Brian, Guess I read your older version of the article. Still there are a Couple of clarifications

            1. ECM was always driven by local banks and international banks didn’t dominate till 2006 as is mentioned in your article. In fact JP Morgan exited their JV with ICICI in 1998. And domestic banks didn’t start dominating Post Lehman. IPOs in India tend to be smaller (~80-100mn$ avg size) and the foreign banks just couldn’t enthuse their global sales team to take interest in a stock with such low liquidity. They also do not have a retail/High Net Worth investor network in India ( who are very active and are earmarked 50% of IPO allotment).The problem continues to this day!
            2. If back office pays 2-3x of front office of domestic banks, back offices should be paying ~100-150k$, which is more than what front office of these foreign banks pay! The fixed base of Back office salaries will probably be 20-30% higher than Indian banks, but their bonus components are negligible.

            Do contact me offline if you want to chat further on this.

          2. OK, thanks for clarifying. I’ll make a few changes based on that. I think the interviewee’s point was just that international banks used to be in a stronger position in the country, even if they didn’t “dominate.”

            I’ve changed around the pay figures.

        2. Arpit Tyagi

          Hi Brian sir,
          I am pursuing my BBA from India and and this is my last year for BBA. After that want to lead any investment banking course as i want to be an investment banker. So please help with better guidance what should i do next and from where i do my course in India or abroad?

          Thank you.

    2. Big4TSIndia

      The deals by EY aren’t just M&A deals where they’ve been appointed as the investment banker but also the ones on which they’ve been appointed diligence advisor. Please read the footnotes to the rankings.

      This is a common misconception but Big 4s group any advisory work on a deal and share that data with the ranking teams.

  5. Payal Madaan

    Which department will bring me closest to realizing IB dream? Is it Product Control (Valuations), Valuation Control or Global Research Center of JP Morgan?

    1. I’m not sure what any of those do, but if they’re all KPO-type roles, you’re better off taking any of them and then moving to a boutique bank to get in, as it’s almost impossible to transfer from one of those to a true front-office role at a large bank.

  6. Suraj Pandya

    Hello guys and Brian Sir,

    I am a recent graduate of Masters of Financial Analysis from La Trobe University in Australia. Its a bit difficult to get job here as they require a PR or citizenship and that process is very time consuming and even does not guarantee a PR and a job after that. I am considering to go back to India and apply for jobs there. So please advice me on that, and please guide me for job prospects as i don’t have any previous work experience.

    1. ??? I’m not sure what you are looking for specifically. If you don’t have a visa, then yes, you will probably have to return to India. Maybe consider a Big 4 role or something related to corporate finance at a smaller firm there.

  7. Aditya Shenoy

    Hi,
    I am 26 years old and am interested in a career in Investment Banking, currently I am pursuing my CA Final which I will finish in November 2016. My academic performance is above average and hope to get into a good company to learn the ropes of IB, could someone guide me through what type of questions would be asked during an interview and also the top 5 IB companies to get in to in India

  8. Avantika

    hi, i passed my MBA last year from an average Bschool that landed me a job in retail banking which was entirely different from what i had studied as a major in finance.So i left within the first 8 months of my joining.I always wanted to enter into investment banking jobs but so far i have not been able to get any response as i do not have enough experience. What should i need to do to land a job?

    1. Rather than aiming for IB directly, target roles that will get you closer… try to do something related to corporate finance at a normal company, for example. There are so few IB roles in India that it’s a crapshoot even if you’re at the top schools.

  9. Hi, i am currently working at a big4-m&a tax. Given my background i dnt think i can get into a target us or uk school. However i am confident of getting into an IIM(india)(the top b school here). Do IB’s hire a lot at IIM’s in india for front office roles??

    1. My understanding is no, because there just aren’t that many front-office IB roles in India to begin with. If you do want to go to b-school, yes, IIM is the one to attend. But I think it will be comparatively more difficult to get into IB from there than it would be from a top school in the US or UK.

      1. While looking at IB opportunities in IIMs, you should look at opportunities in both India and SE Asia. While IBD roles in HK is still lesser due to Mandarin requirements, there are tons of S&T roles offered there to IIM grads. IIMs also have a great alumni network in these cities

        As far as numbers are concerned, the IB hiring (IBD+S&T) is pretty good in IIMs, the top 4-5 IIMs would send anywhere between 80-100 people each year for summer internships in various locations – mostly to Bombay, Singapore and HK. Add another 30-40 in the final placement season, you are comfortably looking at ~100 people getting final offers in different IBs every year (front office roles). This went down drastically post Lehman, but now it’s coming back to the pre-Lehman numbers.

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