By Powerscourt on 15/01/2019

EVENT: Powerscourt’s IR breakfast on changes in direct investor engagement

Powerscourt’s IR team was delighted to host a group of senior investor relations professionals, CFOs and CEOs – including representatives of several FTSE 100 companies – at its first of a series of working breakfasts to discuss changes in direct investor engagement.

The session was led by three expert market participants representing over $4 trillion assets under management: Patricia Lefranc, Head of Corporate Access at Fidelity International; Victoria Redgrave, Director of Corporate and Broker Relations at FMR Investment Management; and Hugo Sanders, Director of Corporate Access and Research Services at Wellington.

The panel shared their perspectives on emerging best practice for corporates’ investor outreach programmes, following the introduction of MiFID II and other market developments. They covered all aspects of corporate access; the value of one-on-one meetings, conferences and site visits, paid-for corporate access, brokers’ reactions to MiFID II and the role of technology.

Their key message was the increasing importance of direct relationships with corporates and continuing institutional investment in in-house corporate access. This is not to underplay the importance of brokers, especially in niche markets, but, increasingly, portfolio managers and analysts will control corporate relationships, making institutional corporate access teams a good first point of contact.

Institutions now prefer to time meetings according to their own needs, rather than being dictated to by financial calendars, with events like post-results roadshows. One-on-one meetings are of particular value. These can attract many participants from individual institutions and while not every attendee may ask questions, all will take part in the post-meeting debrief and any investment decisions that result. Institutions are happy to share meaningful feedback directly with a corporate, but will not always pass this on to brokers, due to the potential market sensitivity.

Well-regarded conferences continue to be very useful and provide good access to corporates. Generalist portfolio managers are especially attracted by the networking opportunities they present. Group meetings are less valuable than one-one-one meetings and a rise in institutions being allocated these has resulted in greater selectiveness about which conferences they attend. To counter declining attendance, some institutions are considering grouping together and hosting their own conferences and site visits.

Willingness of institutions to pay for corporate access provided by brokers is declining rapidly. Buy-side firms see one-on-one meetings as a basic corporate responsibility for which they should not pay. They are also concerned that payment encourages brokers to arrange meetings with the highest payers. Having said that, they are prepared to pay for conferences that they regard as valuable. The US and Asia charge the highest fees, with the UK at the lower end.

Declining willingness to pay for access is having an impact on brokers, with hedge funds more likely to pay brokers than long-only investors. Brokers can add most value by organising site visits and conferences, and corporates are likely to receive an increasing volume of direct enquiries from investors, given that all sell-side interactions are now chargeable.

Looking ahead, the technological reaction to MiFID II is still taking shape. The market is fragmented, with no clear dominant participants, but institutions are open to discussions with operators of well-subscribed platforms.

Powerscourt’s IR team is working closely with both listed and private companies as they navigate the changing environment. As investors increasingly seek to engage directly with corporates, we can help senior management and in-house IR teams meet this challenge by providing a suite of IR services, including a fully outsourced IR function. Please get in touch at IR@powerscourt-group.com for further information.