Skills investment banks want from equity capital markets (ECM) bankersby Paul Clarke
If you start out as an analyst working in the investment banking division, some firms will initially place juniors into a ‘pool’ of analysts all competing for the top jobs across various divisions. Investment banks want all analysts to be very detail-oriented – you’ll be spending a lot of time crunching numbers and modelling in Excel for banks’ pitch books and prospectuses for IPOs, so it’s incredibly important to get it right.
What separates ECM bankers, however, is not just attention to getting the numbers correct, but understanding the minutiae of what makes companies succeed or fail.
ECM bankers will be paranoid followers of stock market fluctuations
“Beginning a career as an equity capital markets analyst embarks on a steep learning curve which provides you an opportunity to learn the different aspects of technical skills such as valuation and market analysis, as well as soft skills such as communication and multi-tasking,” says David Suen, managing director, head of Asia equity capital markets at J.P. Morgan. “As you progress along the career path you will gradually take more ownership on transactions and eventually a lead on client coverage and origination.”
ECM bankers will also be paranoid followers of stock market fluctuations. Slumping equity markets mean that few companies will want to list and if sentiment sours on particular sectors mid-deal, all the careful work you’ve done valuing a company and pricing its stock could all be for nothing. An extreme example is in China, where after a sustained bull market in 2014, the stock market started to tumble in June 2015 and the government intervened by banning both short-selling and initial public offerings. ECM bankers went from extremely busy as companies tried to capitalise on the equities boom, to sitting on their hands as IPOs were frozen.
This means that often the closest internal allies to ECM bankers are research analysts and the sales and trading divisions of investment banks, which can help provide market colour to the capital markets teams.
“There is no ‘perfect recipe’ to succeed in capital markets but a strong general sense of markets, sensitivity to the dynamic and ever changing environment as well as the willingness to acquire new knowledge and be engaged at all times all contribute,” says Suen.
Rupert Mitchell, the former head of equity syndicate at Citigroup in Asia and now a managing director at Goldman Sachs, told us previously that for all the technical skills he sees in young bankers, he “never hired anyone who did not have a strong interest in financial news and markets – be informed; have a view”.
“Senior capital markets bankers need to have broad internal and external contacts, as well as strong interpersonal skills, marketing capabilities and strong project management skills to balance interests of complex stakeholders,” adds Mervyn Chow, head of global markets solutions group, Asia Pacific at Credit Suisse.
At the start of your career, there are three qualities that any aspiring ECM banker must possess, says Steven Halperin, co-head of EMEA equity capital markets at Barclays: “You need an understanding and interest in the equity and other financial markets, quantitative skills for analysis and qualitative skills to interpret markets and the results of analysis, strong presentation and marketing skills.”
Finally, it’s worth pointing out what it takes to work in equity syndicate. As we’ve said previously, this officially sits outside of ECM – though it’s very closely-linked – and comes it towards the end of a deal. “Syndication is more about project management and being able to solve all sorts of issues that may come up throughout the deal execution process and work effectively with different professional parties both internally and externally,” said Melody Ngan, director in equity capital markets team at Bank of America Merrill Lynch told us previously.