Direct access

Richard Carpenter sees a growing trend in IR teams seeking support for direct interactions with investors.

Investor communications in Europe is changing. We’re seeing much greater appetite for clients to run their own events and to manage their direct interactions with investors in a more professional manner. From a significant rise in Capital Markets Days through to increased coaching and training of CEOs, CFOs and investor relations professionals about to present the story to investors.

Of course, it’s not the radical, overnight change that many predicted in the run-up to the introduction of MIFiD II in January 2018. No, it’s the kind of gradual, ‘did something just happen?’-type change that is more akin to the caution of the corporate world. Turning an oil tanker in a different direction rather than, say, a nippy, little motorbike.

It might be slow, it might be gradual, but change it is. And it is definitely afoot.

Nor are we alone in spotting the shift. Citigate Dewe Rogerson’s latest Investor Relations survey indicates that Capital Markets Days are no longer the domain of the largest of large caps – they are spreading down the capitalisation chain as small and mid-caps seek to manage their own direct contact with investors. And Orient Capital’s February 2019 survey of the FTSE 350 suggests that IR teams cite reduced investor access as one of their key concerns. This is coupled with a drain on their resources as investors begin to prioritise direct meetings of their own with corporate management, rather than broker-arranged conferences.

We can probably sum up this change as a move away from more commoditised, intermediary-led interactions towards more tailored, direct communication between companies and their investors. None of this is wholly surprising, of course. Nor is it totally new. It’s just that MIFiD II has forced greater transparency over the costs that were previously hidden in the system – from fund managers paying for sell-side research; through to a decline in broker-arranged corporate access as charges begin to apply.

The result of all this? Well, aside from a lot of sell-side analysts moving into IR as the demand for their research gets clobbered, we’re also seeing IR-literate scripting, presentation, event and creative skills becoming more in demand. What used to be a relatively simple job of bowling up at a broker conference becomes a lot more complicated when you are hosting and driving your own event. Heck, you might even want to make it look good, too.

If you would like to speak to a Bladonmore team member about our Capital Markets Day products or Executive coaching, please get in touch at: hello@bladonmore.com