A new look at the alternative corporate access platforms available online
Michael Hufton certainly remembers his eureka moment. Formerly at the helm of one of Europe’s largest mid-cap funds, Hufton took a fundamentals approach to stock picking with a portfolio of large, long-term holdings.
‘We were exactly the sort of investor a corporate would want to see,’ says Hufton. ‘Yet we couldn’t get meetings with management teams.’ And why not? ‘The brokers that organized the meetings wouldn’t allow us to because our trading commissions weren’t worth it to them.’ Hufton felt annoyed – but he also saw an opportunity. ‘Clearly the system was broken,’ he says. ‘It wasn’t working in the best interests of investors or corporates. There had to be a better way.’
He is now managing director of London-based ingage, one of a crop of online corporate access platforms that have sprung up in recent years, each vying to deliver a better link between users and providers of capital. While all offer a digital solution, each employs a different business model, addresses different problems and offers a unique value proposition to corporates and IR professionals. Together, the growing cohort of digital insurgents promises to transform a business ecosystem little changed since the advent of email.
Acknowledging much overlap, these electronic platforms can be classified into two broad taxonomic types: aggregators and direct engagement providers. Examples of the former include A2 Access (Dealogic), WeConvene and CorpAxe. Unified calendar products, they all provide investors with a single portal to reach corporate access offers. These automated systems, often transparent to IROs, intelligently solve inefficient communications and logistics gaps between the buy side and sell side. The second group seeks to disintermediate brokers in favor of direct contact between corporates and institutional investors. Product offerings include ingage, Closir, CorporateAccessNetwork.com and Meetyl.
New approaches
‘The direct model allows for access to a broader group of investors outside the traditional sell-side channel,’ says Jeffrey Tha, CEO of San Francisco- headquartered Meetyl. ‘More and more companies are looking for ways to complement traditional outreach channels, and increasing numbers of investment managers want more direct outreach from companies.’
One of those investors is Angus Bogle, co-head of equities management at Schroders. ‘We would like to see a diminished role for broker intermediaries in the corporate access process,’ says Bogle, who observes a systemic conflict of interest in traditional corporate access practice. ‘One key reason is that they get in the way of us passing on what we think to companies. Each has a sales and trading arm and any information we pass through them can effectively signal our investment intentions.’
Aside from conflict-of-interest concerns, Bogle says the costs associated with the traditional model along with regulatory changes in the UK and Europe are also driving institutions like his to seek direct connections with companies. He believes this new model will become increasingly commonplace. ‘In this business, best practice tends to spread globally,’ he says. ‘It could change the way things are done in the US significantly – not necessarily just through local regulatory change but also through regulatory change elsewhere driving best practice.’
Another online platform looking to drive global change is Closir, designed to help professional investors learn about and schedule meetings with listed companies in emerging markets. But CEO Michael Chojnacki says his offering is driven less by regulatory change and more by technology’s growing ability to offer more intimate contact between investors and companies.
‘Even as more markets became investable, more investors were seeking a global component to their portfolios,’ says Chojnacki. ‘But it remained difficult to find out about emerging markets companies and equally hard to arrange meetings with senior management. We saw an opportunity to provide a technology we believe will ultimately connect all investors to all the world’s investment opportunities.’
The retail factor
John Daly, CEO of Melbourne-based ListCorp, has similar aspirations. His LinkedIn-style website resembles other offerings in the space, but with one significant distinction. ‘ListCorp is a digital publishing platform designed to help companies anywhere efficiently communicate directly with their vast and disparate retail investor audience,’ says Daly. ‘Both the brokerage industry and the financial press have shrunk dramatically and we aim to fill that information gap.’
Daly believes IR teams increasingly comprehend the value of long-term retail investors. Yet the costs of reaching them, communicating a compelling message and managing subsequent relationships all pose a dilemma – a dilemma that Daly claims ListCorp can solve.
‘Companies have turned to social media to reach individual investors,’ he notes. ‘Yet they are discovering these platforms are not built for that purpose. We offer social media specifically designed to make it easy for firms to tell their story directly to individuals in a way that complements how this audience searches for and processes information.’
As with other online platforms, ListCorp’s ability to close the communications loop with actionable feedback offers alluring IR benefits. ‘Analyzing investor behavior on the site lets us feed back to companies insight about how investors are reacting to the various sorts of information and media they consume,’ says Daly. ‘Investor relations teams can use that data to monitor investor sentiment and improve their messaging.’
Open access
In this emerging – and so far fragmented – industry, gaining critical mass is job one. Each digital provider approaches the task with different – and evolving – functionalities and fee arrangements. Radek Barnert launched WeConvene in 2012 aiming to automate event management between the buy side and sell side. Having built a solid user base, he’s now moving to include IROs in the workflow.
‘For now, IROs are an island,’ he says. ‘Our vision is to bring together all three parts of the community on a platform that enables everyone to interact in real time. No one should be left out.’
Adrian Rusling, partner at Brussels-based Phoenix-IR, agrees. ‘IROs are looking for an online marketplace that is inclusive,’ he states. ‘It must be transparent and eliminate the conflicts of interest that exist. To do that in its most basic and pure form, it has to be virtually free.’
Open access for corporate access? Amid a changing technological and regulatory environment, and with so much money on the table, it remains to be seen which model (or models) will prevail. Savvy, white-glove service isn’t likely to die. Meanwhile, IR in-house responsibilities seem set to grow. What’s certain, however, is that companies are increasingly irked by the fetters imposed by convention and seek new ways to extend their communications reach.
As stock and information markets evolve, Rusling believes the days of IROs’ often relatively passive role in the corporate access process are waning. ‘IROs need to take charge,’ he warns. ‘Otherwise, the passive ones will end up talking to an ever- decreasing number of institutions.’
The players
Closir
Emerging markets IR specialist led by former BNY Mellon vice president Michael Chojnacki. Now in private beta, full launch expected this year. Has offices in London and New York.
How it works:
– Small and mid-cap emerging markets companies fill in a LinkedIn-style template profile. Targeting and analytics tools help investors pinpoint opportunities and then keep up to date with company travel plans, as well as schedule meetings and access unique strategic information
– Closir staff support up-to-date information provision, as well as shepherding meeting and call requests
– Features tools to evaluate and compare IR strategy. Provides online feedback.
Edge: ‘Our passion is about linking IR with technology.’
Cost: Free for companies. Plans premium features, including detailed analytics, targeting tools, investor profiles and perception studies.
Clients: Currently available to almost all listed Russian companies. Plans expansion this year to Turkey, Iran, Saudi Arabia, Poland and Eastern Europe.
CorporateAccessNetwork.com
Launched by Brussels-based consultant Phoenix-IR in 2013, the online network complements the independent roadshow provider’s existing service.
How it works:
– Corporates get free alerts about an investor’s interest and can then organize meetings themselves or mandate Phoenix-IR to do it. Sell side can post events (conferences, non-deal roadshows) to extend institutional outreach
– Recently joined forces with financial research platform ResearchPool to create a digital solution combining equity research and corporate access.
Edge: ‘Transparency, neutrality, inclusivity – companies can reach 100 percent of their addressable market.’
Cost: Freemium model: corporates pay for extra features via ‘extremely low’ annual subscription. Otherwise bundled into retainer contracts. Investors pay nothing.
Clients: More than 900 institutions and more than 1,800 corporates.
ELITE Connect
Social network-style portal developed by London Stock Exchange Group that offers video meeting rooms with document sharing, note-taking and interactive Q&A. Live since November 2015.
How it works:
– Firms create a profile and publish content to ‘followers’
– Company and investor search lets users filter results based on interests, company size, location and industry
– Embedded agenda and messaging feature co-ordinates in-person or remote meetings. Tailored participant profile pages. Keeps personal history of meetings and messages
– Works with any web browser, mobile device or conference room system
– IR practitioners decide extent of broker involvement.
Cost: As of July 1, listed companies will pay £5,000-£10,000 ($7,000-$14,000) yearly, depending on services required
ingage
Launched in 2013, the London-based firm offers a direct link between corporates and institutions on an IR software platform.
How it works:
– Focused on in-person encounters, a scalable, cloud-hosted platform lets investors see available meetings and roadshow itineraries while firms select the investors they most want to meet
– Subscribers book appointments, manage notes and private profile information, and directly share confidential, encrypted feedback. IROs can gather responses from meetings with non-subscribers
– Offers automated reports and record keeping with bespoke reports tailored to individual client requests. Mobile device accessibility allows on-the-go management of meetings and travel.
Edge: ‘Vertically integrated and specifically designed for Mifid II, ingage is entirely content-neutral,’ states Michael Hufton, managing director.
Cost: Institutions pay £20,000-£120,000 based on various factors including number of active users and trip intensity. Corporations pay £15,000-£30,000, again dependent on a number of factors.
Clients: Include Baillie Gifford, Euronext, Fidelity International, National Grid, PGGM, Philips, Whitbread and William Blair & Co.
ListCorp
LinkedIn-style website offering individual investors advanced search engine technology to discover investment opportunities. Founded by former institutional broker and fund manager John Daly, the Melbourne-based company services markets in Australia, New Zealand and the UK.
How it works:
– Companies set up a standardized online profile with key financial, operational and governance data. Profiles include a calendar of upcoming events and an email link to contact companies. Firms can upload diverse media including videos, photos or presentations
– Investors ‘follow’ selected stocks, receiving alerts when profiles change
– Robust search functionality promotes quick, targeted retrieval of otherwise fragmented information.
Edge: Integrates with other social media channels by allowing easy ‘sharing’ of corporate news and information.
Cost: Currently free for companies and investors.
Clients: Include BHP Billiton, Computershare, Commonwealth Bank and Telstra.
Meetyl
Founded in 2012, the San Francisco-headquartered firm was acquired by Glass Lewis & Co in 2014. Promises to ‘match up companies and investors whose interests are aligned’.
How it works:
– Browser-based application uses pairing algorithm to connect institutional investors and companies ‘based on overlapping, user-defined interests’ (sector/sub-sector, market cap, investment region, and so on). Companies target ‘best fit’ investors and arrange meet-ups with investors that have expressed interest.
Edge: ‘Our algorithmic matching system filters investment criteria to an exceptionally granular level,’ says CEO Jeffrey Tha. ‘That’s particularly useful for smaller companies operating in industry sub-sectors.’
Cost: Free for institutional investors and companies. A premium version offered to issuers via an annual license adds various analytics relating to money flow and comparables.
Clients: More than 400 companies, including Allegiant, Canadian Oil Sands and Pacific Biosciences, and more than 500 institutions.
WeConvene
Stoked by analyst ranking firm Extel, the Hong Kong- headquartered service went live in June 2014. Designed to centralize and streamline buy side/sell side interactions.
How it works:
– Sell side sends investors corporate access invitations and other company information. Monitors interest
– Investors filter, identify and book meetings, and track and rate interactions with analysts and corporates
– IR teams organizing an event internally or with a sell-side partner are offered real-time access to all event information and investor analytics.
Edge: Email-free platform for real-time meeting creation, communication and confirmation.
Cost: Freemium model: extra ‘enterprise level’ goodies for paying customers.
This article appeared in the Summer 2016 issue of IR Magazine