FIG investment banking has gained immense popularity in recent years due to the rise of financial institutions and the availability of lucrative deal flow. Financial institutions like banks, insurance companies, brokerages, and asset managers have seen tremendous growth, especially in emerging markets like China and India. This has created a huge demand for investment banking services to help with M&A, IPOs, restructuring, and capital raising. FIG groups at leading investment banks have accumulated deep sector expertise and strong relationships with FIG clients, giving them a competitive edge. The recurring nature of FIG deals related to M&A, equity issuance, and debt issuance ensures a steady deal flow for FIG teams.
Growth of financial institutions drives FIG banking demand
The financial services industry has seen rapid growth and consolidation over the past decade, especially in emerging markets. As banks, insurers, and other financial institutions expand, they turn to FIG investment bankers for advice on M&A, capital raising, and other strategic needs. Larger financial institutions also acquire smaller players to gain market share and synergies. The rise of fintech companies is also creating deal flow as traditional institutions partner with or acquire startups. As financial regulations evolve, banks and insurers undertake restructuring which requires FIG expertise.
FIG offers resilience during downturns
During economic downturns, the FIG sector tends to be more resilient than other industries due to the essential nature of financial services and active M&A. While IPOs and other equities activity may slow down, banks and other financial institutions continue to pursue M&A and capital raising for regulatory and competitive reasons. Their access to capital and large cash balances make financial sponsors less vulnerable to tight credit conditions. The FIG niche also develops strong client relationships and sector expertise that weather downturns better than generalist banking teams.
Recurring transactions from FIG clients
FIG clients like commercial banks, insurance companies, and asset managers require frequent capital raising and advisory services that provide a stable deal flow. FIG groups handle multiple equity and debt issuances annually for each client to help meet regulatory capital requirements and fund growth. M&A activity recurs as financial institutions undertake acquisitions to consolidate, enter new markets, and acquire capabilities. IPOs and spin-offs also generate regular business as FIG companies divest non-core units and undertake financial engineering.
Deep sector expertise in FIG
The specialized nature of financial institutions requires FIG teams to develop deep knowledge across sub-sectors to advise clients effectively. Bankers need to grasp the nuances of commercial vs. retail banking, asset vs. wealth management, life vs. P&C insurance, and other domain expertise. Leading FIG teams include former industry executives and accountants who understand financial services intimately. This expertise allows FIG bankers to uncover opportunities, identify synergies, and navigate regulatory issues during deals.
Availability of lucrative advisory roles
The FIG sector offers lucrative investment banking roles focused on high-fee advisory work. FIG deal teams spend most of their time on M&A, restructuring, equity/debt issuances, and other advisory mandates rather than sales and trading. The emphasis on high-value advisory makes FIG a coveted choice for bankers who want to build their expertise and progress into senior client-facing roles. Deal sizes in FIG can match other sectors, while advice is often needed for smaller strategic deals below the radar of generalist teams.
FIG has emerged as a highly attractive sector in investment banking due to surging demand from financial institutions, resilient deal flow, specialized sector knowledge, and lucrative high-fee advisory roles. FIG groups are well positioned to advise financial clients on strategic M&A, capital raising, IPOs, restructuring, and specialized transactions.