Introduction

You are considering career choices in finance, and two areas come up frequently: investment banking and private equity. Both are at the top of the high finance world in India, pay well, and require extremely strong analytical thinking skills. However, investment banking and private equity represent two very different worlds. This guide breaks down what private equity is vs investment banking, the types of investment banking, the types of private equity, and why understanding investment banking and private equity matters before you choose your path.

What Investment Banking Looks Like for You

Imagine yourself in Mumbai’s BKC or Delhi’s Connaught Place, pitching to a promoter at 2 a.m. That’s investment banking. You act as the trusted advisor to companies raising capital or executing strategic moves. Your core job? Help clients navigate the public markets.

In an investment bank, you may underwrite IPOs, advise on mergers & acquisitions (M&A), or structure bond issuances. When an Indian unicorn files its DRHP with SEBI, your team creates the valuation model, writes the prospectus, and works to persuade institutional investors to subscribe. You are on the sell-side, which means selling the securities or business interests to investors.

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Types of Investment Banking You Can Join

1. M&A Advisory: You value target companies using DCF, comparable transactions, and precedent IPOs, then negotiate deal terms.

2. Equity Capital Markets (ECM): You manage IPOs, follow-on public offers (FPOs), and QIPs for listed firms.

3. Debt Capital Markets (DCM): You structure rupee bonds, masala bonds, or ECBs for corporates.

4. Restructuring: You rescue distressed firms via CDR, S4A, or IBC proceedings.

Be prepared for workweeks between 80 and 100 hours, particularly as live deals are in progress. Initially, in your first 2 years as an analyst, you will be responsible for creating pitch books, involved with financial models, and analysing heaps of Excel sheets.

What is Private Equity?

Now picture yourself years into the future in a field office in Powai, sitting across the table from the CEO of the mid-sized SaaS company, whom your private equity firm just acquired. This is private equity investing, where you invest capital directly into firms, typically acquire a significant stake (often control), and add value to the operations to ultimately sell the business (in part or in full) for a profit after 4–7 years.

In private equity, you’re on the buy-side. You scour the market for undervalued companies, conduct rigorous due diligence, and partner with management to scale revenues, cut costs, or expand geographically.

Types of Private Equity You Can Target

1. Buyout: You acquire 100% or majority stakes, often using 60–70% debt (LBO model). Think Warburg Pincus is buying Sharekhan.

2. Growth Equity: You take minority stakes in high-growth firms needing capital but not control.

3. Venture Capital (early-stage PE): You back startups at Series A/B with ₹50–200 crore cheques.

4. Distressed: You buy stressed assets via NCLT or ARC routes.

Investment Banking vs Private Equity: Head-to-Head

Why the Jump from Investment Banking to Private Equity Happens

You’ll notice most private equity associates in India cut their teeth in investment banking for 2–3 years. Why? Banking equips you to assess value, structure deals, and understand the language of the industry, ideal training for due diligence in PE. Funds appreciate and seek candidates who have gone through the tough banking process and have complete knowledge of capital markets.

Yet, the switch isn’t mandatory. If you join a top-tier B-school, some funds recruit directly via internships. Alternatively, 3–4 years in strategy consulting or corporate development at a large Indian conglomerate can also open PE doors.

Conclusion

The Indian deal market is thriving, $80 billion in private equity dry powder is ready to be deployed, and IPOs hit record volume in 2024. Whether you are advising on those IPOs or financing the next unicorn, understanding the distinction between investment banking and private equity will put you at the centre of India's growth story.

Are you ready to redesign your CV for internships next summer? Be sure to take courses in financial modelling, SEBI regulations, and live deal trackers. The finance world is a meritocracy, and you now have a clear sense of how investment banking vs private equity can positively impact your finance journey.