RD:IR introduces investor access department
Changing corporate access rules in the UK have paved the way for Richard Davies Investor Relations (RD:IR), a London-based IR consultancy, to create a new investor access department.
Following the appointment of Jenni Herbert, former head of corporate access at boutique investment bank Liberum Capital, RD:IR will offer a dedicated investor access service for clients. Richard Davies, the firm’s founder and managing director, says new UK rules concerning corporate access and sell-side research mean companies may require advice on how to manage relationships with stakeholders or future investors.
‘Most companies still firmly believe corporate access should be provided by the brokers as part of their service but we know that for many smaller brokers, offering corporate access and research as an in-house function is going to become prohibitively expensive, so we expect these services to be increasingly outsourced over time,’ he explains.
Davies adds that the advent of Europe-wide regulations in MiFID II will also shake up how the UK sell side operates. ‘The new environment is good for the IR sector, as companies that do not currently have an IRO will need to consider this option to manage their investor access,’ he continues. ‘Although we act as outboard IR for many of our clients already, we believe there should be someone in-house dedicated to the IR role, even if it’s only at an administrative level to manage buy-side access to senior management. Companies will need to be more proactive than ever in making sure their equity story is getting out to the right people.’
Though RD:IR already offers a set of access services – broadly grouped into screening, targeting and roadshow management – the company’s new division will allow its services to adjust to changeable conditions, says Davies. This will include integrating RD:IR’s existing shareholder analysis and targeting campaigns – as well as proprietary data to add additional insight – into IR InTouch, the consultancy’s own IR platform.
‘We are looking to help companies where they are experiencing a degrading of service from their traditional routes to market, not just in the UK but also internationally,’ Davies says. ‘I suspect that for larger, more heavily traded stocks, life with regard to access will go on fairly much as normal, but for smaller issuers life is already tough and getting tougher, as stockbrokers in this market are less incentivized to provide access to investors.
‘We know that for very small companies, maintaining or increasing liquidity is a real issue. We are also discovering that European companies that historically received good service from the London sell side are no longer being offered London roadshows in some cases, which is a great shame both for them and potential investors here.’
Davies concludes that his ultimate aim is to work with the sell side to achieve the common aim of improving liquidity in the market. ‘We would like to see a healthy sell side that operates to the benefit of both large and small issuers,’ he summarizes.
In future, Davies says there is scope to expand RD:IR’s operations overseas. ‘We are already active in western Europe, the Nordic region, Turkey and Israel, with recent client wins across all of these markets, which is very exciting,’ he says. ‘We are looking to bring our approach to more markets and regions, as our vision is not market-sensitive. Any public company can benefit from our help and support.’