I-banks scoop up IIM grads as slowdown casts a cloud
3 min read 15 May 2023, 10:48 PM ISTB-schools and i-banks said there was a note of uncertainty and this may impact placements
PremiumMUMBAI : Investment banks have snapped up management graduates from leading Indian business schools even as they are wary of the slowing economy, placement executives at top B-schools said.
“A high interest rate environment is not ideal for investment banks because it leads to a slowdown in the sell-side business. Economic downturns, inflation and turmoil in the banking sector have impacted stock prices, as well as the bottom line of several large banks," said Sudipta Mandal, chair, placements at IIM Indore. Global investment banks that had hired about 60 students from the premier institution last year, have signed up 70 students this year.
IIM-Ahmedabad has, however, not seen any change in the hiring plans of banks. “The recession has impacted the banking industry, with the number of financial transactions in the economy declining. This has affected bonuses and retention, but hiring numbers have not changed," said Ankur Sinha, chairperson, placements, IIM-A.
Among investment banks, Goldman Sachs was the largest recruiter (including pre-placements) from IIM Ahmedabad with eight offers, followed by O3 Capital with three.
Investment banks are also tweaking their hiring strategies, and those who offered interns permanent jobs via pre-placement offers (PPOs) skipped the final placement process at many IIMs.
However, those who did not take the PPO route, recruited freshers during the final placements. Investment banks typically pick up the best graduates and are preferred by the candidates due to the roles offered and the hefty compensation packages.
IIM-Lucknow witnessed subdued PPOs from investment banks, but saw a doubling of offers at the final placements, starting February. “The surge in investment banking offers, despite the fall in PPO, showcases the resilience and adaptability of the finance industry," an IIM Lucknow spokesperson said in an email response to Mint.
Prantika Ray, chairperson, placements, IIM Kozhikode said a “prominent global IB" fulfilled the PPO offers, but “did not participate in the final placements again". Another investment bank doubled its hiring at the final placement, Ray said adding 10-12 students were hired for investment banking positions during the final placements of 2023, which is at par with the previous year.
However, B-schools and i-banks said there was a note of uncertainty and this may impact placements, going ahead.
IIM Lucknow said although i-banks have not altered recruitment plans yet, they are cautious about the impact of a global slowdown. “In conversations with industry leaders, there exists a stable and promising environment for both internship programmes and future hiring cycles. But, according them, it is essential to exercise caution as the market can see unexpected fluctuations," the B-school said.
“The campus batch of 2020-22 saw significant uptick in hiring in the face of bullish markets and high attrition," an executive from a mid-sized investment bank said. “The campus batch 2021-2023 saw a reversion towards mean, owing to much lower attrition. Going forward, the market sentiment remains bullish, and hiring will continue as normal," the executive added.
The nature of transactions in the Indian M&A, private equity and equity capital markets segments that require investment bankers has changed. While 2021 and 2022 saw higher levels of tech-focused deals as well as a robust IPO pipeline, the past year has seen the trend shift more towards block deals. Mint reported on 26 April that block deals had hit a record high of ₹1.87 trillion in FY23, up 63% from the preceding fiscal year. “We are also focusing on building our relationships with companies and advising them on other strategies, as the fundraising pipeline has been selective," a startup-tech focused investment banker said, describing the shift in nature of work.
In India, investment banks have seen some turmoil due to the consolidation of UBS Group and Credit Suisse, with some investment bankers having to look out for new jobs.
But the market has also seen lateral movements and new investment banks upscale their business.
.
