FaceTime or face-to-face time? Or is the new post-pandemic normal a mixture of both? Lloyd Bevan asks IROs around the world for their verdicts on our new research discoveries
One thing that may become apparent looking back on the Covid-19 pandemic is not so much how it created new trends in working practices, but rather that it dramatically accelerated nascent trends, forcing individuals and firms to abandon the traditional way of doing things and providing a vacuum for ideas such as remote working and virtual meetings to step into.
Initial responses to virtual meetings were positive, with IROs and investors being able to continue their engagement without any great disruption to the dynamic. Now, after two years of virtual meetings being the dominant method of engagement and with the return of in-person meetings, the question is: are virtual meetings here to stay?
In the last quarter of 2021 and the first quarter of 2022, IR Magazine surveyed IR professionals and members of the investment community on the current state of corporate access, including their views and practices regarding virtual and in-person meetings.
Findings from this study form the basis of two reports on corporate access, the first of which appears in this issue of the magazine.
In the second half of 2021, 93 percent of meetings held with investors were virtual: after more than 20 months since global restrictions were put in place, virtual meetings remained the overwhelmingly dominant format.
According to IROs, it takes an average of three meetings with an investor before it takes a position on the company. More than six in 10 IROs and more than half of investors say this is unaffected by whether these meetings are held in person or virtually. But around a third of both IROs and investors say it takes more virtual than in-person meetings before an investment decision is made.
It's clear from this that while there is no dramatic difference, in-person meetings do provide an advantage over virtual meetings in terms of IR. It is not that investors are put off by virtual meetings: there is a broadly even split between those who are more likely to take a virtual meeting and those who lean more toward in-person meetings. But where the difference clearly lies is in terms of engagement. While one third of investors say the format makes no difference to how engaged they are with meeting the company, nearly six in 10 say they are more engaged with in-person meetings.
Affryll Teo, Tune Protect
According to Affryll Teo, head of IR and sustainability at Malaysian insurer Tune Protect, ‘one reason could be the intrinsic value investors place on face-to-face interactions. It potentially gives investors the opportunity to size up management and, on that basis, perceive management’s ability in steering the business before making an investment decision.’
Smooth talking With in-person meetings providing an edge over virtual meetings in terms of the depth of investor engagement, are there any areas where virtual meetings can provide an advantage over the in-person variety? One clear area is in terms of logistics. Even with the lifting of restrictions and the potential return to in person, virtual meetings are just much easier to arrange.
Improved access to senior management has long been a goal shared by both IROs and investors. As Peter Schuman, director of IR at US-based wireless company Cambium Networks, says: ‘Virtual meetings are more efficient and give investors more access to the executive suite. I’ve been waiting for a catalyst to switch to virtual meetings and Covid was that event.’
This ease of logistics may indeed be a reason for the comparative lack of engagement, however. With virtual meetings easier to arrange and attend, investors can treat them more casually than in-person meetings and be less committed to the process.
Cliff Ransom, an analyst with more than four decades of Wall Street experience, views the embrace of the virtual format as a trend in the wrong direction and says it speaks more to the ineffectiveness of most investor relations than the value of virtual.
‘It goes without saying that the number of virtual meetings required to make a decision exceeds the number of in-person meetings,’ he comments. ‘The appearance of a CEO’s face on a video screen will never tell us as much as a walk through a factory, a supplier’s facility, the warehouse, the HR department or an R&D lab.’
Nevertheless, the ease of logistics and the fact that virtual meetings are not restricted by being location-based can lead to new avenues being opened up in the world of corporate access. Companies can engage with investors that would be considerably harder to access in person.
I’ve been waiting for a catalyst to switch to virtual meetings and Covid was that event
Windows to the world The second corporate access report by IR Magazine, released this summer, investigates how virtual meetings have affected companies seeking investment opportunities outside of their region.
According to this second report, approaching four in 10 companies have seen the number of meetings with investors outside of their region increase since the start of the pandemic. On top of this, 62 percent expect the number of such meetings to increase over the course of this year.
This is backed up by the experience of the investment community. Almost two thirds of investors say virtual corporate access has increased how much they engage with investment opportunities outside of their region, with a third saying this increase has been large. Additionally, 28 percent have seen an increase in the number of companies they invest in outside of their region in the past 12 months.
Gaye Aksongur Yavuz, analyst at Turkish brokers Ziraat Yatirim, expresses a view common outside of the principal investor locations: ‘Even though virtual meetings are not favored among investors, the positive aspects they bring – such as not needing to travel to meeting locations, thus easing costs – are undeniable.
‘I believe virtual will keep its place after Covid alongside in-person arrangements, with meetings outside investors’ regions – especially initial get-togethers with low predictability – being carried out via online facilities.’
Fleur Wright, Northcape Capital
Similar views are found among those on the buy side. ‘As an investor outside of the EMEA region, we have certainly increased our engagement – it is now much easier to do virtually and there are more meetings available,’ says Fleur Wright, portfolio manager at Australia-based Northcape Capital. ‘While in-person meetings are usually a value-add and nice to have before investing, I find you can usually get to that point faster with a few easier-to-organize virtual meetings beforehand.’
Stefanie Steiner, Douglas
On the corporate side, Stefanie Steiner, head of investor relations at German retailer Douglas, agrees: ‘Virtual meetings expand your span of potential meetings – in both number and region. In future, I expect hybrid formats will continue to be offered as they have advantages for both corporates and investors: easy to arrange, lower time requirement, small associated costs and more meetings in a single day possible.’
It appears virtual investor meetings are here to stay – not as a replacement for, but rather as a complement to, the in-person format. While the ease of logistics can result in a lack of depth in investor engagement, it also provides a breadth of potential opportunities unable to be achieved in person.
The first part of our research into corporate access appears in this magazine edition and is available to download for IR Magazine Essentials subscribers. The second part will be available to IR Magazine Advanced subscribers this summer.
