Investor targeting series: When to market in Asia
How have your first six months been with Sherritt International?
We’ve had a whirlwind of activity since I joined, and I’ve experienced a couple of positive things. The share prices of commodity companies are sometimes impacted by the cyclical nature of the industry. I joined just before we started to see some recovery in nickel prices, and now there’s a better appreciation of nickel in the fast-growing market.
That was one of the reasons why we did some marketing in November 2017. We took advantage of this trend with three consecutive days of marketing in Hong Kong, Singapore and Sydney. It was extremely well received. The appetite for Sherritt, nickel and cobalt was there. This has led to us announcing a $132 mn capital-raise, which just closed.
When was the last time Sherritt International had been out to Asia?
The company hadn’t been to that part of the world in almost four years. Going out to Asia is a significant investment for a company in Toronto – you’re looking at a week away from your day-to-day activities.
Our decision was driven by a couple of factors: in Europe and Asia, much more so than in North America, there is a conversation about electric vehicles. China has now set a target for 10 percent of sales of new vehicles produced to be electric by 2019, which is driven by the need for cleaner air. Those kinds of developments are causing people to look at electric vehicles, and you need nickel and cobalt to make them.
How did you organize your marketing efforts in Asia?
We collaborated with a Toronto-based broker; it’s the first real marketing for Sherritt in some time. We’re covered by around four or five analysts and we’ve done marketing with them in the past, but in the last two years the marketing has been almost non-existent. Dealers didn’t think there would be much interest, but after this Asia trip we started getting a lot of calls.
You were marketing in some countries where investors’ holding disclosures aren’t as strict as they are in North America. What challenges did that pose?
In Asia we met with a couple of companies that had holdings and we had to ask them point-blank what their holdings were – and they were reticent to say. It’s important to work with your broker in those situations to get a better understanding; their client is both the issuer and the investor.
For a Toronto-based company, it must be grueling to visit Hong Kong, Singapore and Sydney in one week. How did you manage it?
To be honest, it was adrenaline. We flew out on Sunday and got to Hong Kong on Monday. We had our first meeting at 7.00 am on Tuesday, followed by a full day of meetings. Then we flew to Singapore on Tuesday night and had a full day of meetings on Wednesday. Then we had an overnight flight to Sydney.
That said, adrenaline definitely helps, but the good thing for us was that it was me, our CEO and our head of sales. The energy levels weren’t always 100 percent for all of us, but we backed each other up. And as an IR person in that situation, it’s particularly important to make sure your CEO is in a good place and not glossing over key details of the story.