The majority of Asia-based investors say they are unwilling to pay for corporate access, according to a new survey from corporate access platform Spark Plus.
Omar Taheri, founder of the Singapore-headquartered firm, says the practice of gaining ‘free’ corporate access from the sell side remains strong in Asia, despite some change as global institutions adjust to the introduction of Mifid II by the EU at the start of 2018.
To get a better picture of perceptions around corporate access in Asia, Spark Plus (whose business model sees corporates charged, while access remains free for the buy side) interviewed 50 investors, including family offices, wealth managers and fund managers, giving a snapshot of views from the region.
The first survey question it asked is: How likely are you to pay a broker to arrange a meeting with a company?
More than half (55 percent) say they are unlikely to pay for a meeting. ‘We believe the main reason for this is that, in Asia, the buy side continues to get its corporate access for free from brokers,’ says Taheri, who adds that ‘the general feeling among the investors we regularly speak to is that few expect Mifid II to affect Asia at all.’
Having conducted more than 50 roadshows over the past year, however, Taheri says Spark Plus is already seeing the knock-on effects of the regulation, as ‘the big European institutional investors are able to take a meeting with a broker only if there is a formal payment agreement in place.’
The second question Spark Plus asked is: If you are interested in meeting a company in which you do not own shares, would you pay a broker to arrange this meeting?
This time the ‘no’ response is even more resounding: 85 percent of respondents say they would not pay a broker to set up a meeting with a company they don’t own – even if there is interest there. Taheri says institutions are more likely to reach out directly, or grow their own in-house corporate access teams.
‘Some investors are also considering outsourcing this function to third party providers who can make corporate access easier for them,’ adds Taheri, who says Spark Plus has had global banks approach it for this purpose.
Finally, Spark Plus gets to the money question: What level of payment would you make to a broker for arranging a company meeting?
Almost three quarters (74 percent) say they would pay less than $250. A fifth (21 percent) say they would fork out $250-$500 and just 5 percent say they would pay more than this for corporate access.
‘We have seen numbers thrown out there that banks would charge between $1,000 and $10,000 for a meeting with a CEO,’ notes Taheri. ‘As our survey indicates, the buy side in Asia would be very unlikely to pay such sums.’