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Investment Banking Insights & Secrets by Gene Moldavsky

Discover the world of investment banking from Managing Director Gene Moldavsky and learn about deals, operations, compensation structures, and career paths in this informative lecture. Uncover the mysteries and strategies behind making a successful career in investment banking.

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Investment Banking Insights & Secrets by Gene Moldavsky

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Presentation Transcript

  1. Everything You Always Wanted to Know About Investment Banking(But Were Afraid to Ask) Gene MoldavskyManaging Director, Head of Corporate Finance, Alfa-Bank December4th, 2009

  2. Why am I here on a Friday night? • Lecture objective: to share a slice of the real world • Investment Banking Experience • Managing Director, Head of Corporate Finance, Alfa Bank (2007-present) • Executive Director, UBS Investment Bank (2002-2006) • Vice President, Renaissance Capital (1997-2001) • Education • Boston University, School of Management • London School of Economics • Deals/Transactions • Over 50 Investment Banking transactions • Aggregate deals value exceeds US$25 billion • Examples • US$1.9 billion Svyazinvest privatization (1997) • US$2.0 billion merger between Rostelecom and Moscow MMT (2000) • US$3.4 billion public markets sale of MTS shares by Deutsche Telecom (2004/2005) • US$4.8 billion acquisition by Mittal Steel of KryvorizhStal (2005) • US$1.2 billion sale of Maxi Group to NLMK (2007) • US$400 million sale of Corbina Telecom to Golden Telecom / VimpelCom (2008) • US$1.2 billion rights offering of X5 shares (2008)

  3. How is an Investment Bank different from all other banks?

  4. What do Investment Bankers do all day? 1 Front Office: Where the money is made! • Middle Office: Where the money is not lost • Risk management – market and credit analysis minimizing risk of loans and trades made by the bank • Treasury – responsible for funding, capital structure, liquidity and maximizing return on cash on hand • Financial control – capital flows analysis, budgeting of the bank, reporting, global risk management, etc. • Back office: Where the money is not made • Operations – clearing/checking trades by Sales and Trading (settlement) • IT – front office support (PCs, Bloomberg), hedging algorithms, electronic trading, settlement systems, financial reporting • Compliance – compliance with government and internal regulations 2 3

  5. How do Investment Bankers earn money for their firms?

  6. How do Investment Bankers earn money for THEMSELVES? • Typical Compensation structure: salary and bonus • Stock payment / vesting an important consideration • Disproportionate bonus at senior levels (Director / Managing Director) Statistics Note: 2009 compensation expenses annualized. Number of employees for GS kept constant in 2009 vs 2008 Russian market compensation ranges • Investment Banking • Sales / Trading • Research • Investment Management • Private Equity

  7. What is the landscape of Investment Banking in Russia?

  8. What are the building blocks of making a career in Investment Banking? • Proper education • University name recognition • Proper coursework (finance, accounting, valuation, capital markets) • Supplemental boring reading (valuation methodology, “The Art of M&A”) • Supplemental fun reading (“Liar’s Poker,” “Bonfire of the Vanities,” “Barbarians at the Gate,” “Den of Thieves,” “The Last Tycoons,” “House of Cards”) • Getting the first job • Proactive behavior • Existing connections / relationships • Perfecting the interview process – making the right first impression • Doing the homework on the employer • Moving up the organization and making more money • Demonstrate the basics • outstanding mathematical skills • no mistakes on tasks performed • quick learner • positive attitude even in 15 hour days • team work behavior • improvement of internal processes; creativity • Develop management skills to oversee teams/departments • Develop deal origination skills (“smelling a deal”)

  9. What other secrets do you want to know?

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