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Mar 31, 2010

Roadshow guide to London, Frankfurt and Edinburgh

Find out the best places to present, eat and sleep. IROs offer tips on keeping management happy

‘What the heck are we doing back here again?’ shouted the chief executive in exasperation. Such a scene will resonate with regular visitors to the UK’s sprawling and congested capital.

London’s financial institutions are mostly divided between the City, Canary Wharf and Mayfair – where many hedge funds are located – and it’s common for visiting companies to find themselves driven by the sell side to meetings between these locations in the most illogical fashion.

The worst thing the CEO can feel when abroad is that his time is being wasted, however, so it’s a good idea for the IRO to keep firm control of the itinerary. ‘When we come to London, I take control,’ states Jack Carsky, Visa’s global head of IR. Carsky knows his way around London exceptionally well, having visited the capital for several years on the fixed-income side and then with Visa.

‘I’ve been there so many times the city is etched on my brain,’ he explains. ‘When it comes to meetings in London, we have a substantial amount of holders and considerable interest in us. In a place like that, I don’t let the sell side dictate who we are going to see – I tell the sell side. We always stay in Mayfair and one of our primary accounts is in the area, so I call the account and say we want the meeting to be either 8.30 am or 4.00 pm, because we’re not going to the City, coming back for that meeting, then heading off for the City again. It’s kind of funny when someone on the sell side doesn’t seem to understand that.’

As a financial center, London does not have quite as much to boast about as it did five years ago. Its banking system was taken down several pegs during the credit crisis. In addition, influential eyes (and the funds they manage) are looking to the East in search of growth.

But the exodus of talent does not spell the end of London’s role as a major money manager. Far from it: many think the city will remain a favored destination for global companies looking to raise capital. They will just be ‘trading 
at the wrong address,’ as one fund manager puts it.

Still in the game
On the US equity side, London is still the number-one home for assets under management outside the States. Publicly released figures put the amount of US equity under management in the city at around $217 bn, but that’s just the tip of the iceberg, according to market intelligence firm Ipreo – so IROs will likely be doing roadshows in London for plenty of time to come.

Investor meetings in London are typically held at the offices of your broker or the institution you are visiting. A group lunch is also helpful to ‘put together the balance,’ notes Carsky.

One of the benefits of London is the diversity it offers listed companies in terms of where to eat, sleep and present. When presenting to a bigger audience, one of the most popular places to host an event is the London Stock Exchange, advises Dudley White of Edelman’s London-based financial practice. The venue, located by St Paul’s Cathedral on Paternoster Square, makes up for its lack of character with access to copying, printing and internet services, as well as a variety of different-sized rooms. These kinds of add-ons can be difficult to access in other locations, such as hotels. The City Presentation Centre off City Road to the north of Bank is also a good bet for larger presentations.

The Science Museum offers a high-tech themed venue, although it is a few miles west of the City, notes White. For the traditional touch, drinks company Pernod Ricard has used Haberdashers’ Hall in West Smithfield, which has a banqueting room, to present to journalists when on a results trip. While listening to the figures, Pernod treated the hacks to a three-course meal and several glasses of wine, perhaps in the hope they would be too far gone come the Q&A to ask anything taxing 
of management.

Recommendations for hotels include the Connaught, which is very nice but on the expensive side, and the Marriott just a few blocks away. The Four Seasons also gets the thumbs-up. ‘It all depends what part of London you want to be in,’ says Carsky. ‘Some people like Mayfair but others prefer to be closer to the lower end of Hyde Park.’

If you need to take someone out and want to impress, French restaurant The Bleeding Heart, near Holborn, comes well recommended by almost everyone. The sell side and buy side are usually keen to take out visiting issuers but, at the end of a hard day and in the middle of a tough roadshow, it’s sometimes best just to call it a night. ‘We get lots of offers from investors, in particular the larger ones, who made a ton of money from us,’ says Carsky. ‘We just say, Thanks but no thanks.’

Where to eat
The Bleeding Heart 
Tel: +44 20 7242 2056
Dean Street Townhouse
Tel: +44 20 7434 1775
Gaucho Canary
Tel: +44 20 7987 9494

Where to sleep
Tel: +44 20 7618 5010
The Berkeley
Tel: +44 20 7235 6000
The Connaught
Marriott London
Tel: +44 20 7493 1232

Top holders
BlackRock Investment Management
FIL Investment Services
Legal & General Investment Management
M&G Investment Management
Schroder Investment Management
Source: Ipreo

A warning for those visiting Frankfurt for the first time: beware the cider. Local brokers like to take out clients on the night they arrive for a glass of apfelwein, a locally produced cider of truly deceptive strength.

It’s a running joke among the city’s financial community that newcomers can’t handle the cider, explains Wolfram Schmitt, Deutsche Bank’s former head of IR and honorary president of DIRK, the German investor relations association. ‘I’d advise you not to follow the traditional suggestion of spending your first night across the river Main in the suburb Sachsenhausen, with its cozy and old-fashioned äppelwoi bars, unless you want to risk a major headache the next morning that could severely damage the rest of your roadshow.’ Schmitt lives just outside Frankfurt and has practiced investor relations in the area for more than 10 years.

Of course, the idea of a night on the tiles is often just a fanciful notion for IROs with tight roadshow schedules to keep to. Luckily, 
for the time-pressed traveler, Frankfurt’s buy side is tightly concentrated and all the big institutional investors can be seen in a one-day visit.

Following the sale of Commerzinvest to Allianz Global Investors, Germany’s financial hub has only four large institutional investors: Allianz, DWS Investments, Deka Investment and Union Investment. Together, these investors account for around two thirds of Germany’s equity purchasing power. ‘ Try hard to get a one-on-one meeting with each of them,’ recommends Schmitt.

On a one-day schedule, a lunch meeting could also be organized to mop up the balance of smaller investors. Frankfurt’s hotels are good venues to host such a lunch event, although the city is not alien to breakfast or even dinner meetings if these fit your schedule better.

Culture clashes
Are issuers likely to find German investors any different from those in the UK or the US? ‘There are differences,’ comments Lars vom-Cleff, who works in the corporate access department at Germany’s financial giant Deutsche Bank and helps organize roadshows around Frankfurt.

‘In general, US investors are more interested in the strategy and the business story, while UK investors are more number-crunchers, digging deep into the details and trying to find out everything. German investors are a bit more relaxed, not as pushy as they are in London. It’s a mixture of figures, strategy and getting to know management.’

One way Frankfurt is set apart from other financial centers – like London – is its small size and efficient transport system. The airport is conveniently located just 10 minutes from the city on a regular train. Most issuers, however, will enjoy the use of a private car service. Vom-Cleff recommends TIT Chauffeur Service, which he uses for his own clients.

Once in the city center, another option is to walk. Many of the venues you are likely to visit are within strolling distance of each other. Not that there’s that much to see. ‘To a certain extent, I have to admit that’s true,’ concedes vom-Cleff. ‘Frankfurt is a small city with a few skyscrapers. I don’t know how many people are living here, but it’s not that many. Of course, there is a nice nightlife. We have museums, culture; it’s not as bad as one thinks. But it’s definitely not comparable with other European cities.’

When picking somewhere to stay, many overseas travelers opt for the Villa Kennedy. ‘Wow, what a place,’ enthuses one regular visitor from the US. A combination of ‘traditional and innovation’, as the hotel’s website puts it, Villa Kennedy is known for its otherworldly charm plus excellent food and service. Brokers see it as a good place to impress clients. In kind, some IROs see it as a good place to keep the chief executive sweet.

The one drawback is its distance from the city – not that it’s very far, just a 10-15 minute trip in a taxi. For those who want to stay centrally, the number-one hotel in the city is the Steigenberger Frankfurter Hof, positioned next to the Commerzbank tower and also the tallest hotel in Frankfurt, says Schmitt. The centrally located Hilton and InterContinental are also both regularly used by IROs, he adds.

Time out
If you do a get a chance to sample the nightlife, Frankfurt has good restaurants and bars in abundance, notwithstanding its reputation as something of a dull destination.

‘If you want to impress someone you might invite him or her to the New York-style steakhouse Ivory Club, or a new arrival by the same owner called Zenzakan, a cross-over Asian restaurant open only for dinner,’ advises Schmitt. ‘Both are handily located next to Deutsche Bank’s twin towers. Otherwise you can find many good Italian and German places around the Alte Oper concert hall, the Goethestrasse, Frankfurt’s most exclusive shopping street, and the Fressgass, a place to be seen in the city.’

For drinks, one great tip is to head for Zum Bitburger, which is a ‘real insider place,’ according to Schmitt, for two reasons. One, it is where the best pils (a popular German beer) and bratkartoffeln (sautéed potatoes) are served in the city. But far more importantly, Zum Bitburger is the meeting point for Frankfurt’s bankers and brokers, who gather there round wooden tables to reflect on the day’s business and entertain clients. Just don’t forget that 
alcoholic drinks in Germany tend to be on the strong side…

Frankfurt’s four main institutional investors
Allianz Global Investors
Deka Investment
DWS Investments
Union Investment
Source: Ipreo

Where to sleep
Hilton Frankfurt
Tel: +49 69 133 8000
Tel: +49 69 260500
Steigenberger Frankfurter Hof
Tel: +49 800 7846 8357
Villa Kennedy
Tel: +49 69 717120

Where to eat
Champions – The American Sports Bar & Restaurant
Tel: +49 69 7955 8305
Chicago Meatpackers
Tel: +49 69 231659
The Ivory Club
Tel: +49 69 7706 7767
Tel: +49 69 9708 6908
Zum Gemalten Haus
Tel: +49 69 614559

The financial crisis laid low the giants of Scottish banking, leaving institutions like the Royal Bank of Scotland and HBOS on their knees and majority-owned by the UK government. Perhaps they were punished for straying from Scotland’s traditional business of sound and sensible investment management.

The country’s knack for saving and investment means the capital, Edinburgh, is ranked seventh in Europe’s list of top equity managers. In fact, the banking crisis in Scotland has only cemented the position of its canny investors. For example, Scottish Widows, the life insurer with headquarters on Edinburgh’s Morrison Street in the heart of the financial district, picked up £42 bn ($63 bn) of assets from HBOS’ London operation during 2009.

Standard Life Investments, Edinburgh’s biggest asset manager, has also performed strongly. It saw its total assets under management rise by £14.9 bn to £138.7 bn on last year’s figures when it reported in February this year.

‘Edinburgh remains an essential place to visit if you are raising money on the markets,’ comments Owen Kelly, CEO of Scottish Financial Enterprise (SFE), a representative body for Scotland’s financial services industry. ‘The community of investment managers is very strong and it is a very influential group in making decisions about where to place investments internationally, not only in the UK.

‘Funds under management have recently increased considerably at a number of the larger houses and we now estimate there to be about £550 bn under management for Edinburgh as a whole.’ Of this amount, around £251 bn is estimated to be invested in global equities, £135 bn in bonds and the rest in other areas.

Historic center
Edinburgh’s fund management industry is 300-odd miles and a world away from the hustle and bustle of London. For a start, there are no hedge funds and most fund managers focus on the long-term picture. Those arriving from the US used to quarterly presentations should be ready to talk about the business outlook for the next two or three years.

Furthermore, most institutions are packed into the city’s financial district, based around Lothian Road to the west of Edinburgh Castle; there is no need to spend your day in the back of a cab, crisscrossing the city, as is often the frustrating case in the UK’s other financial center.

A trip to the city can usually be completed in one day and the main task is to secure one-on-ones with four or five of the big institutional investors. Focus on Aegon Asset Management, Baillie Gifford, Martin Currie, Scottish Widows, Standard Life and Walter Scott & Partners. As is the case with other secondary cities on a roadshow, a group breakfast or lunch can be used to make contact with your smaller holders or potential investors. For those contemplating a return after some years away, it’s worth noting the overall number of investment management firms in Edinburgh, and Scotland as a whole, has reduced in recent years following ‘a significant number of mergers and acquisitions,’ according to the SFE.

For getting around, the sell side will normally provide private car hire. ‘That’s why we bring them,’ quips one IR manager. Jonathan Neilan, managing director at Financial Dynamics and a former IRO at Irish packaging company Jefferson Smurfit Group (now part of Smurfit Kappa Group), helps organize roadshows to Edinburgh and likes to use Mews car hire. ‘Edinburgh city center is only 20 to 25 minutes from the airport by car. It’s a place that is easy to get in and out of,’ he says.

Also known as the Athens of the North, Edinburgh is charming to see, even if this is just from the window of your private hire car as you drive from one meeting to the next. The dominating feature is Edinburgh Castle, built on top of an extinct volcano that is 
estimated to have risen around 350 mn years ago. Subsequent erosion has left the rock with a tail, down which runs the famous Royal Mile, a central focus during the city’s annual festival.

‘Edinburgh is a fantastic city to visit as a tourist and, while there’s not always time on an IR roadshow, with a couple of spare hours, Edinburgh Castle is impressive and worth a visit,’ advises Neilan.

One way to see Edinburgh without interrupting your busy schedule is to eat, present or sleep at one of the locations with stunning views of the city. A favorite of PR firm Fleishman-Hillard is the Balmoral Hotel on Princes Street. ‘It’s good for meetings, accommodation and eating,’ says Claire Gourlay of Fleishman. ‘It has good-sized meeting rooms with great views of Edinburgh, and the accommodation is of a high standard.’

Neilan agrees. ‘The Balmoral and the Sheraton work for events and have facilities for group lunches,’ he says. ‘The Number One Restaurant at the Balmoral is also good for a small group lunch.’

For restaurants, Gourlay 
suggests the Oloroso, which combines locally sourced food with a panoramic view of the city, and The Tower; this venue, perched above the National Museum of Scotland, offers fantastic views of Edinburgh Castle. Other tips include the centrally located VinCaffé and The Witchery – ‘very good food, and atmospheric,’ Gourlay says.

If you want to push the boat out and have money to burn, the castle itself or the grandiose Signet Library in Edinburgh’s old town can both be booked for events.

Top holders
Aegon Asset Management
Baillie Gifford & Company
Scottish Widows Investment Partnership
Standard Life Investments
Walter Scott & Partners
Source: Ipreo

Where to sleep
Balmoral Hotel
Tel: +44 131 556 2414
The Glasshouse Hotel
Tel: +44 131 525 8200
The Scotsman
Tel: +44 131 556 5565
Sheraton Hotel
Tel: +44 131 229 9131

Where to eat
Tel: +44 131 226 7614
The Tower
Tel: +44 131 225 3003
Tel: +44 131 557 0088
The Witchery
Tel: +44 131 225 5613