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Learn about the world of investment banking Our goal is to make the intriguing world of investment banking accessible to everyone. By offering in-depth analyses of key areas such as valuation, mergers and acquisitions, and capital markets, we break down sophisticated concepts and equip you with the practical skills necessary to excel in this highly competitive market. Learn More Robert G. Allen "How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case." RECOMMENDED PAGES Private Equity Learn about how private equity works Learn More Career Progression Learn about the hierarchy in an investment bank Learn More OUR AIM At the Academy of Investing, our mission is to demystify the world of investment banking, making it accessible to all. We strive to break down the complexities of this lucrative and high-powered industry, providing clear, comprehensive education and guidance. Our goal is to empower individuals with the knowledge and skills needed to pursue successful careers in investment banking, offering insight into both its opportunities and challenges in an ever-evolving financial landscape.

ESG Investing ESG stands for Environmental, Social and Governance. This method of investing also factors in a company's environmental practices, social impacts and governance policies in order to develop sustainable and ethical business practices whilst also aiming for high financial returns. Key Aspects Environmental Factors Assessing a company’s greenhouse gas emissions, carbon footprint and their efforts to reduce them Evaluating their use of natural resources, waste management, and water usage Considering their impact on ecosystems and biodiversity preservation efforts Social Factors Ensuring that working conditions are up to standard, the rights of the employees are upheld and there are adequate health and safety practices Looking at the company's contributions to the development of the local and wider community and how strong their relations are with stakeholders Evaluating their diversity and equality policies and practices Governance Factors Judging the diversity, independence, and structure of the governing board Assessing their policies on corruption, executive compensation, and ethical business practices Examining the clarity and honesty of corporate reporting and stakeholder communications Benefits of ESG Investing Risk Management Those companies that display strong ESG practices are often better equipped at managing the environmental, social and governance risks. This tends to allow the company to have more stable and sustainable returns. Long-term performance ESG-focused companies usually show promise of future success due to their sustainable practices and strategies. Investor Demand More investors are seeking companies that align with their personal values as well as global movements. There is an ever-growing movement towards environmentally-friendly practices as well as a push for more diversity and equality within companies. This has led to more demand for ESG-compliant companies. Measurements Currently, there is a lack of standard metrics and methodologies for measuring ESG performance which makes it difficult to compare companies. Data Quality The accuracy and reliability of ESG data can vary as there are no set ways to measure all the various factors. Trade-offs Some argue that focusing on ESG factors may lead to trade-offs in financial performance. However, the evidence on this is mixed. Challenges of ESG Investing ESG Strategies 01 Positive Screening This involves actively selecting to invest in companies who show strong ESG performances. 02 Negative Screening This is where you choose to exclude a company from your investing strategy because they show poor signs of ESG performance. 03 Thematic Investing This type of ESG investing involves focussing on specific themes such as renewable energy and searching for companies that employ that strategy. 04 Engagement This involves taking action to help improve a company's ESG practices. Future of ESG Investing With regulatory pressures increasing and investor awareness rising, ESG investing is expected to continue to progress. The link between sustainability and long-term financial performance is also accelerating this growth. The movement represents a significant shift in investing with emphasis being placed on having a positive impact within the company and the wider community alongside financial gains. Back to Learn Next Page

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Future of Finance This page will discuss some of the hot topics in the world of finance right now that many people predict will takeover. Cryptocurrency It is a digital currency that operates on decentralised technology, a blockchain, and uses cryptography for its security. Cryptography is advanced code that is practically impossible to hack, counterfeit or double-spend. All the cryptocurrencies in the world exist on computers from all over the world, which means that they are not controlled by one single authority. The main cryptocurrency currently dominating the market is Bitcoin (BTC) and it was also the first created. Blockchain technology is instrumental to the functioning of cryptocurrencies and has been adopted by many major companies including JPMorgan Chase. It is essentially a set of blocks connected together with each block holding data on transactions of the cryptocurrency. Each transaction is verified by a number of members that depend on the network used and also every member of the block before the check is finalised. This long check makes the system very secure. Currently, many investors are wary of cryptocurrencies due to their high volatility. They also get a lot of stick for having high energy consumption rates in the mining process as well as being involved in criminal activities. The future for cryptocurrencies is globally disagreed upon. In El Salvador, it is an official currency whilst in China, all transactions relating to cryptocurrencies are banned. However, those in favour want a global framework that establishes regulations for the use of crypto similar to the work being done under the Biden administration. Algorithmic Trading Algorithmic Trading is the process by which you use computer to trade. You define a set of parameters that the computer will act upon automatically when they are met and either buy or sell in the market. It requires no human input for the computer to do this, making the system faster, more efficient and gets rid of human error. The future for algorithmic trading holds potential growth into new markets such as cryptocurrencies. Machine learning and AI integration will also play a bigger role as it would allow for the analysis of vast amounts of data and from that adapt new trading strategies that go with the evolving nature of the markets. They can reveal more complex patterns that would no be as apparent to human traders. High Frequency Trading (HFT) will continue to be prevalent. HFT strategies involve extremely rapid trade execution, especially in highly liquid markets. Growth in the sector as well as competition is expected to drive innovation and technology in order to reduce latency and improve execution speeds. Another possible outcome is that it makes its way into retail trading and is utilised by independent investors. However, all of this growth would come with increased regulations and more required security. This is to ensure market stability, transparency, and fair competition. Firms that engage in algorithmic trading will also need to employ more robust digital security measures to protect themselves against cyber threats and system failures. Back to Learn Next Page

Career Path In investment banking there is a clear-cut hierarchy in roles. Many people are attracted to this industry for the money, others live for the excitement and thrill, and some prefer the exit opportunities in varying industries. Same old... The investment banking career path and corporate hierarchy is well-defined and hasn’t changed much over time: Intern You can become an intern at an investment bank through summer work experiences. You learn about the inner working of the bank and mainly help out the analysts. Analyst As an analyst you mainly write out Excel spreadsheets and compile Powerpoint presentations, as well as carrying out other administrative tasks such as tracking buyers and sellers, managing the data room and deal documents, and responding to requests from clients and potential clients. Associate Associates will assign most of the work to their analyst, check it, and occasionally carry out the "menial" tasks such as preparing presentations and spreadsheets, especially for more complex presentations and meetings Associates are also given more responsibility through attending more meetings and interacting with more clients. Vice President (VP) Many people that you will come across at an investment bank are Vice Presidents. It is arguably one of the toughest jobs in this hierarchy as you have the most to juggle. They take on more of a management role over the associates and analysts so their working hours are slightly lower. They take requests from more senior partners and then relay the information to the analysts and associates, working with them to complete the task. Obviously, there is more responsibility and with that comes much more client interaction such as calling potential buyers to sell a product the bank is selling. Director As a Director you will still maintain some of the responsibilities that a VP has however, your main aim is to win more clients for the bank. Ultimately, that is what is required to make it as a MD. Managing Director (MD) As a Managing Director, you are expected to bring in clients for the bank, arrange meetings with companies and improve relations with your clients and potential big clients. Back to Learn Next Page

FinTech The use of technology and innovation to provide and improve financial services What is it? The word itself is a mash-up of the words, "financial" and "technology". The term encompasses a wide range of activities focussed on improving financial services for companies and consumers. Some of these activities are listed below. Payments Some FinTech companies offer solutions for online payments, money transfers, and digital wallets. Some examples are PayPal, Square, and Venmo. Lending Some platforms allow borrowing and lending between individuals and companies without traditional financial intermediaries, such as LendingClub and Prosper. Online Banking A major market that has taken over is online banking which includes checking and savings accounts, loans, and investment options. Banks like Ally Bank and FinTech companies like Chime offer such services. Digital Currencies It has also played a major role in the rise of digital currencies and blockchain technology. Advising Investing is made more accessible with the development of AI and data analysis which can provide automated investing advice. This is a small industry with large potential growth, companies that offer these robo-advisory services include Betterment and Wealthfront. Crowdfunding It has led to the development of crowdfunding platforms that raise capital, such as Kickstarter. Data analysis Fintech firms use data analytics to provide insights into personal finance, investment, and budgeting. Examples include Mint and Personal Capital. Future of FinTech Most analysts in the industry predict FinTech to be key to the future of finance and expect it to transform the industry. This would include expansion of the fields it currently operates as mentioned above. Additionally, many companies are adopting digital services such as Goldman Sachs who aim to make around $750 million from its FinTech department by 2024. Through this progression to a more digitalised world of banking it also brings side benefits to the technological industry. For example, with an increasing number of online transactions taking place, FinTech companies have had to develop digital verification systems to improve their security. This technology can be easily adapted into other industries as well, making it multi-faceted. This brings about an overall improvement in the digital space. A big player in the future of FinTech is machine learning and AI. With its ability to analyse vast amounts of data and observe complex patterns that humans would struggle to notice, machine learning enables more accurate credit scoring, risk assessment, and fraud detection. As well as this it can use predictive analysis to improve investment strategies with more accurate and data-driven advice for investors. Chatbots and virtual assistants powered by machine learning can improve customer service and streamline inquiries whilst also cutting costs for firms. Additionally, machine learning can optimise financial operations, from automating routine tasks to predicting market trends. Since the very nature of AI is to evolve and adapt, it will prove to be very useful in the financial technology realm which is very fast-paced. Back to Learn Next Page

Bid Offer A bid-offer is a commonly used concept in financial markets used to describe the difference between the bid and offer for a particular security or asset. What are they? Bid This is the highest price a buyer is willing to pay for a particular security or asset Offer This is the lowest price a seller is willing to sell a particular security or asset for Looking at a financial instrument such as a stock or currency pair, usually you will see two listed prices: the bid price and the ask price (offer). A stock listed with a bid price of $20 and an ask price of $20.15, tells us that buyers are willing to buy the stock at a maximum price of $20 and sellers are willing to sell it at a minimum price of $20.15. The bid-offer spread is the difference between the bid and ask prices. Thus, the spread above $0.15. The spread represents the transaction cost or the profit margin for the market maker or broker facilitating the trade. Back to Learn Next Page

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Want to learn more about the world of Investment Banking? Investment Banks Learn about the different types of investment banks and what they do Structure Learn about the internal structure within investment banks Career Learn about the different career paths within an investment bank Roles on the Floor Learn about the various roles on the trading floor Bid offer Learn about what a bid-offer is and how to calculate it Roles in the Investment Banking Division Learn about the various services provided by the investment banking division Mergers & Acquisitions Learn about the different types of mergers and acquisitions Valuation Learn the different metrics used to value a company Equity Capital Markets Learn about the various functions of the equity capital markets division Private Equity Learn more about the private equity industry Future of Finance Learn about what the future of finance holds Boutique Banks Learn about what boutique banks are and do Trading Learn how to make daily trades using various strategies Entry into Investment Banking Learn about how to land a job at an investment bank FinTech Learn about what FinTech is and what its future holds Asset Management Learn strategies used to manage assets in a portfolio Environmental, Social and Governance Principle (ESG) Learn about the aspects of ESG investing

Boutique Banks A boutique bank is a type of investment bank that specialises in a specific sector of investment banking Differences... A boutique bank offers more personalised and specialised services compared to the major investment banks. This is mainly due to them being smaller in size and only operating to fewer clients. Some key characteristics of a boutique bank are listed below. Specialised They often specialise in specific areas of finance, such as mergers and acquisitions (M&A) or corporate finance. This allows them to provide highly tailored services to their clients. Personalised As well as specialisation, they focus on personalisation, typically working with a smaller number of clients and provide customised financial solutions to meet their unique needs. Client Relationship Their personalised approach leads to a requirement for stronger client relationships because it can lead to a deeper understanding of the client's financial goals and more effective financial solutions. Niche Market These banks often work in specific industries such as the technology, healthcare, or real estate sectors. Culture Boutique banks tend to have a more entrepreneurial and collaborative culture compared to larger banks. This is optimal for professionals who prefer working in smaller teams and taking on more responsibility. Examples of Boutique Banks Listed below are four boutique banks with their specialisations, employee count and revenue Evercore M&A advisory services, restructuring, and capital raising. 2245 employees $3.29 billion (revenue) Lazard M&A advisory, restructuring, and asset management services. 3402 employees $2.86 billion (revenue) Greenhill & Co. M&A advisory and restructuring services, with a focus on providing independent advice to clients 364 employees $258 million (revenue) Houlihan Lokey M&A advisory, financial restructuring, and valuations 2610 employees $1.81 billion (revenue) Back to Learn Next Page

Roles on the Trading Floor There are three main roles on the trading floor: Sales, Trading and Research Effective communication... All three roles have different and unique jobs. However, their works feeds into one another and it requires effective communication. Sales Salespeople have to convince their clients to trade, (either "buy" or "sell" a product), using the data and information provided by the traders and equity researchers. They offer solutions and different ideas to their client to keep them with the bank. The job involves being able to communicate and maintain strong relationships with clients of the bank. Better salespeople will perhaps build stronger relationships through arranging dinners or being more empathetic. Trading Traders provide the prices to the client and execute orders, managing risk at the same time. They are the market-makers. Some traders also operate on behalf of the bank, trading with the bank's assets. Research Equity research analysts conduct research into public companies and format their findings into reports which the bank may sell to investors or use as guidance for their own clients. The analysts relay information onto the traders and salespeople on whether their clients should consider buying, selling or holding a stock. Back to Learn Next Page

Private Equity Private equity refers to a type of investment in which investors provide capital to private companies. Private equity firms raise funds from these investors and then use that capital to acquire, invest in, or provide financing for privately held businesses. Examples Some examples of private equity firms include: The Blackstone Group Founded in 1985 by Stephen A. Schwarzman and Peter G. Peterson Headquarters: New York City, USA Expertise in real estate investing Assets Under Management (AUM): US$880.9 billion Kohlberg Kravis Roberts (KKR) Founded in 1976 by Henry Kravis, George Roberts, and Jerome Kohlberg Jr. Headquarters: New York City, USA. Pioneer of the leveraged buyout (LBO) industry Assets Under Management (AUM): US$503.9 billion The Carlyle Group Founded in 1987 by David Rubenstein, William E. Conway Jr., and Daniel A. D'Aniello Headquarters: Washington, D.C., USA Focus on buyouts, growth capital, and distressed asset investments. Assets Under Management (AUM): US$385billion EQT Partners Founded in 1994 in Sweden. Headquarters: Stockholm, Sweden. Strong presence in the Nordic and European markets. Assets Under Management (AUM): US$239 billion What is Private Equity? Private equity companies, such as KKR, acquire businesses so that they can sell these businesses for a profit. To acquire them, they raise funding from high-value investors and the firm then manages these funds. Typically, this funding is complemented by borrowing. Due to its relative novelty, this sector has experienced significant growth. As expected the popularity for investment in companies is greatest when the market is bullish - stock prices are high. It is up to the private equity firms to manage the companies well to ensure that it grows in value and prominence in the market. Otherwise, the company could be left in much debt from the borrowing. Deeper dive... Typically, private equity firms invest into more developed companies. Within this, the funds can be invested in a specific and targeted manner. For example, the fund could be towards rebuilding struggling companies, expanding those that have just exited the start-up phase or it could be directed towards a certain industry, such as healthcare. Quick-fire Characteristics Private Ownership The companies that are invested in are privately held Active Ownership Private equity firms often take an active role in the management and improvement of the companies Bigger Picture The investment tends to last a few years in order to improve the company and to ensure a flip-side profit Illiquidity The investment tends to be less liquid, so investors need to commit their capital until profits start coming in High Risk-Reward Ratio The investments carry both a high potential return and a high risk, so the private equity firms have to ensure that they make a return on the investment Diverse Portfolio Private equity firms tend to invest in various industries to diversify their portfolios and spread risk. Types of Deals Leveraged Buyout (LBO) This is where a private equity firm acquires a company using a significant amount of debt to meet the cost of the acquisition Venture Capital Venture capitalists provide capital in exchange for equity stakes in high potential start-ups Growth Capital These deals involve mature companies that are looking to expand, invest or look to new markets Distressed Debt The firms invest in the debt of companies that are struggling financially Mezzanine Financing This involves providing both the debt and equity components of capital Secondary Buyout A private equity firm buys a portfolio company from another private equity firm Carve-out Where a parent company separates one of its divisions and sells it to a private equity firm What happens next? After the deal has been made, the private equity firm typically takes managerial control of the company. They either remove the existing team and manage the company themselves or bring in a new team, or work with the existing team. The firm will already have a plan of what they aim to do whether it be restructuring the company or expanding it into new markets. All of this with the aim of selling the company for a profit later on. Back to Learn Next Page