Virtual offers IR-only opportunities in off-the-beaten-track destinations, says Phoenix IR
Adrian Rusling, founder of Belgium-based Phoenix IR, talks frankly to IR Magazine about how heading to smaller investor destinations can help diversify the investor base in locations more open to IR-only meetings. And with the pandemic having moved everything online, he explains that an increasing number of companies have been adding such cities to their roadshow schedules.
While he stresses that he doesn’t want to ‘overstate the importance’ of these cities, he asks: ‘Why not be more inclusive?’
How have companies changed the way they view off-the-beaten-track destinations since Covid-19 moved everything online? And how do you expect this to evolve in a post-Covid world?
Pre-pandemic, very few companies were visiting outlier cities. Many companies don’t consider these geographies, but they should – particularly in a virtual environment because there is no additional cost to reaching these places where institutional investors are accumulating assets and are thirsty to meet companies.
What have been some of the most popular cities to ‘visit’ and why should companies have these destinations on their radar?
We play in the broad EMEA timezone space. Institutional investors from Brussels, Cape Town and Johannesburg, Helsinki, Lisbon, Luxembourg, Madrid, Monaco, Vienna, Warsaw and the Gulf states have been attending our European roadshows, in addition to the obvious traditional destinations like London, Edinburgh, Dublin, Zurich/Geneva, Paris, Amsterdam, Frankfurt, Milan, Stockholm and Copenhagen.
These smaller financial centers can deliver marginal buyers for the stock and help companies diversify their shareholder bases. I don’t want to overstate the importance [of these destinations] but, at a time when many companies have a very narrow focus on a small number of key institutions, why not be more inclusive? Try something new. Innovate a bit. Marketing is, after all, the process of attracting new shareholders.
If only a small number of top owners know you, who will replace them when they sell? I worry that some companies have forgotten what marketing their stock is all about. Of course, [Mifid II has also had an impact] because the brokers are constrained when reaching out to new investors if they are not already their clients.
Is there a typical company that has particularly benefited from this wider net?
Not really, except that larger caps are more likely to be more popular in the smaller markets.
What should companies bear in mind when preparing to visit the types of investors found in these more off-radar destinations?
They should know that knowledge levels are lower and that portfolio managers tend to be generalists – so the pitch needs to be more top-down strategic.
Are such cities a good option for IR-only meetings or does management also need to join?
IR can do the trailblazing [in these destinations].
Do you have any meeting numbers from these roadshows you can share?
We’ve done about 50 virtual roadshows since the pandemic started and we don’t get investors from these small cities to every roadshow. There are only five to 10 targets in each under-the-radar city so the scope is not huge – but it’s all incremental.
Finally, what are your thoughts on when and how we might see a return to in-person meetings?
In-person might start in the autumn but it will depend on how this next phase of the reopening goes. If infection rates pick up again, in-person might not return until 2022. Longer term we are likely to see a hybrid model of in-person with tier one targets and virtual-only with tiers two and three.