The growth of buy-side corporate access teams and how to connect with them
Companies thinking about bringing in new technology face a broad array of options: there are more than half a dozen corporate access services on the market with elements targeted at IROs.
One firm to step back from the fray is Meetyl, which enabled companies and institutional investors to connect directly. The platform, bought by proxy adviser Glass Lewis in 2014, ceased to operate as a stand-alone product earlier this year and will no longer be promoted to external users, according to a spokesperson for the company.
‘A number of the platforms were set up to facilitate direct interaction between companies and investors, but that process just hasn’t happened as quickly as everyone thought,’ says Bragg. ‘We’ve seen one of the US platforms shut down, but the trend is in their favor.’
This year also saw major producers of IR workflow solutions move to add corporate access capabilities to their services. IHS Markit, which acquired Ipreo last year, announced it had added event management tools to its existing product suite. Around the same time, Nasdaq revealed a partnership with WeConvene, a corporate access platform that links the buy side, sell side and corporates.
The adoption of corporate access tools may be easier for US and Canadian companies given they already use technology extensively for investor targeting. In North America, nearly three quarters (73 percent) of IROs use a tech platform to enhance their targeting activity, according to IR Magazine’s Investor Targeting report. By contrast, the figure is 38 percent for Europe and 33 percent for Asia.
But around a third of respondents in both Europe and Asia say that, while they don’t use a platform now, they would consider doing so – showing many companies are open to more technological support in this area. Small caps are the least likely to use tech for targeting, finds the report, most likely due to a lack of resources.
Whatever additional support a company brings in, there’s also a need for a change in attitude, says Weidema. The sell side was not just setting up meetings – it was actively out there selling your stock. With that activity in decline, companies need to fill the communication gap, and there is a lot they can learn from brokers.
‘You have to take on the mindset of a salesperson,’ says Weidema. ‘Whenever something big happens in the industry, reach out to your largest shareholders because they could be incremental buyers of your stock that are easy to identify.’ As for his IR department, Weidema is holding back on any major adjustments at this point. ‘Let’s first see whether the experimental phase leads to new insights, and then we can think budget-wise and people-wise whether we want to change,’ he says. ‘Today is very different from a year ago. And my guess is that in a year from now, it’s going to be very different from today.’
As IR teams plan for more direct contact, investors are doing the same. In recent years, the number of buy-side firms with internal corporate access teams has steadily increased and now stands at more than a dozen.
What’s more, five of those companies now plan to put on their own series of investment conferences – with the sell side not invited. The development highlights how serious investors are about exploring new models for corporate access.
Companies now face the challenge of getting to know the internal teams, and each has its own unique features. But ultimately they should prove a valuable resource to IR departments that want to build direct relationships with investors.
Fidelity Investments has had someone in a corporate access role since 2002 – but for the rest of the buy side, this is a more recent development. Norges Bank Investment Management (NBIM), which manages Norway’s huge sovereign wealth fund, created its team in 2013. The middle years of the decade saw a number of hedge funds follow suit. And since 2017, major asset managers like BlackRock, Capital Group and T Rowe Price have built out global operations.
‘We’re seeing several different means of corporate access on the buy side manifesting themselves,’ says Davies. ‘I would say the hedge fund community, as a result of Mifid II, is finding itself at a point where it needs to ensure it can get the access it wants. Hedge funds are putting on a different face, becoming more acceptable, talking more about their strategies.
‘Meanwhile, large institutional investors are running a variety of events on their own, including reverse roadshows. Some of the teams are going as far as having corporate access teams that not only have a top-down structure, but also go on a sector-by-sector approach. Each firm is acting a little differently in that respect.’
Overall, the investment community has slightly pulled back on its use of the sell side to co-ordinate meetings, according to IR Magazine research. A net 13 percent of investors globally have lowered their reliance on brokers for corporate access over the last year, while 73 percent report no change, finds the Investor Targeting report.
Europe and North America are leading the changes: a net 27 percent of investors in Europe say they have decreased their use of brokers for arranging access, while a net 25 percent of investors in North America report the same.
The biggest teams have targeted global coverage with staff in multiple cities. BlackRock, for example, has a group of 12 spread out across New York, London and Hong Kong, helping to co-ordinate events such as site visits, field trips, roadshows and conference calls.
While duties vary from firm to firm, they normally include managing corporate access arranged both via the sell side and directly with companies. The teams also educate IROs on how the investment firm is organized and who the most appropriate people to meet are.
‘I would say you need to get to know these people – lean on them to understand the inner workings of that organization as much as possible,’ says Richardson. ‘If you go to those representatives directly, rather than go through a broker, I think you’ll get a much more comprehensive answer.’
NBIM has been the most public in calling for companies to get in touch. In December 2017, the month before Mifid II came into effect, it sent a letter to around 1,000 of its largest holdings asking them to request non-deal roadshow meetings directly because it had a policy of not paying for them.
It’s a message Edward Young, head of corporate access at NBIM, reiterates today. ‘We would encourage companies to engage with us directly and use the corporate access team to help them navigate the fund,’ he tells IR Magazine.
‘We have a culture of sharing meetings at NBIM, and offering an executive management or board-level meeting through the corporate access team ensures that all relevant individuals in our organization are notified the meeting is taking place and are given the opportunity to join.’
While Mifid II has not led to a material change in the way NBIM conducts corporate access, the firm has seen a jump in the number of non-deal roadshow meetings organized directly since the regulation came into effect, says Young.
‘Before implementation we were arranging the majority of our trips –where portfolio managers travel to visit companies – in-house, and this has not changed,’ he explains. ‘We continue to rely on the sell side for select conferences and to facilitate a significant number of our non-deal roadshow meetings.
‘That said, we have seen an increasing number of companies arranging roadshows themselves and building out capabilities within their IR teams in order to do so. The number of non-deal roadshow meetings NBIM arranged directly with companies doubled between 2017 and 2018.’
The man who set up NBIM’s team six years ago is now director of corporate access and research services at Wellington Management. Hugo Sanders moved to the private investment firm, which manages more than $1 tn in assets, in June 2018 and has built a new six-person team based in Boston, London and Hong Kong.
‘Mifid II was a factor in our decision to build out a corporate access team, but it wasn’t the only factor,’ Sanders explains to IR Magazine. ‘We also saw an opportunity to co-ordinate our outreach more efficiently and to grow and strengthen our relationships with investor relations teams globally.’
For companies thinking about getting in touch, Sanders’ advice is to ‘use the corporate access team as a resource to better understand the complexities of our firm and partner with us to have your corporate access efforts be more targeted and impactful.’
He adds that, when building a forward calendar for roadshows or other engagement, companies should make contact ‘at the beginning of the planning process’ to ‘help optimize access and co-ordination’.
Wellington – along with Capital Group, Fidelity Investments, NBIM and T Rowe Price – are the five firms that have grouped together to put on their own investment conferences. The first installment, planned for March 2020, will see CEOs of consumer staples companies invited to Boston for a series of one-on-one meetings.
The event will offer a better level of access to the chief executive than you would normally expect, says Sanders. ‘We saw an opportunity to partner with a few other asset managers to create something differentiated and impactful for our portfolio managers and industry analysts: 90-minute meetings rather than meetings lasting 30-60 minutes, and with CEOs only – that’s something that's now rare with sell-side conferences,’ he says.