According to a 2015 Research Report, conducted by IR Magazine, Today’s IROs are more likely to bypass the sell side and target investors – and potential investors – directly. The reason behind this is because they want to take control; enabling the IR professionals to focus on their company’s interests rather than those of the brokers. They want to select investors they identify as the best fit for the company, in preference to the ‘good clients’ of the sell side. “For many, enhancing the investor pool is key as it liberates those favouring the longer-term investment that generally suits the company better than it suits broker interests.” This, however, takes an awful lot more of the IR’s time:
- “Logistical organisation is a lot more challenging without the Sell Side”
- “Arranging logistics can be a challenge; knowing which people to call on can be difficult; third party input can be helpful in expanding the universe beyond the firms we would be inclined to target.”
- “One problem is the lack of good tools to really target individuals at a firm”
- “It can be a shot in the dark when you don’t have the intelligence the sell side can provide’ ‘We could miss a prospective investor because we don’t have local knowledge”
- “Getting a foot in the door is challenging. No one likes a cold call”
- “It’s often difficult to ascertain whether your company fits their portfolio or not”
Looking at some Corporate Cases, the same message is coming through – they are all keen on diversifying their company’s shareholding, so efforts are being made to build relationships with smaller firms outside of the main investment hubs (London, Paris, Frankfurt etc.). This means thinking outside of the usual institutions and more towards to Family Offices and Pension Funds.
As such, I have teamed up with Quantifire, to facilitate the move towards meeting with investors in smaller cities that are not on the usual Sell-Side Roadshow route. In a conversation with the Managing Partner, Charles Hamlyn, he told me that he is constantly receiving requests from investors in smaller places, such a Lugano, to bring issuers to them. As his company has a good relationship with these investors, they already have the insight as to what they are invested in, what industries they are interested in, and what they are looking at in the future. This information is extremely valuable for any IRO who is keen to explore a new investor base.