Roadshows: Include ‘Neglected Investors’ To Improve Efficiency And Broaden Investor Base
We recently updated our homepage, adding an accurate description of the benefits of our services for all the parties involved. We now will use this blog to provide some more colour on specific benefits of broker-independent roadshows.
Broker-sponsored roadshows: meeting the ‘usual suspects’ regularly
While a broker-sponsored roadshow is ‘free’ for the corporate, it comes with hidden costs. One issue is, that brokers usually focus on existing clients and prospects. Large funds, or medium-sized funds with high turnover will still have access to most events as these investors will have a business relationship with quite a number of brokers, and are considered prospects by most of the others. We might call those investors the ‘usual suspects’, as corporates will see them at almost every roadshow.
… but mostly ignoring what we call ‘neglected investors’
However, there are investors that only have a business relationship with a very limited number of brokers. Such a short broker list might be attributable to a low asset base and/or very low turnover resulting in few commissions paid ‘to the street’. Other investors might be sizeable, but due to operational reasons (e.g. a requirement of the prime broker at a family office) or political & business reasons (portfolio managers of discretionary mandates at private banks, UHNWI advisors) only work with very few brokers. As a consequence, these investors will only occasionally be invited to roadshows, despite the fact that these investors are actually quite attractive for many companies, especially smaller ones. That is why we call this group ‘neglected investors’.
Broker-independent events: include ‘neglected investors’ to improve efficiency and broaden the investor base
By having your investor access event being organized by an independent provider the investor targeting – a key component of the process – will be considering the input of the corporate (existing investors & contacts) but more importantly include additional investors selected from a comprehensive universe of available investors. We will provide more details how this is done for schedulR events in a later blog (spoiler alert: IT driven matching, with a finishing ‘human touch’ based on experience and market knowledge). In any case, as we are only paid for by the issuer/corporate criteria like commissions paid to brokers are completely irrelevant.
This broker-independent approach has two major advantages over broker- sponsored roadshows. Firstly, from a practical perspective including additional attractive investors will make a roadshow day more efficient, i.e. make better use the corporate’s precious time. This is the result by seeing more high quality investors during the same time. Secondly, from a more strategic viewpoint, approaching more than the ‘usual suspects’ will broaden your investor base with the potential for higher liquidity in your shares and lower cost of equity which ultimately can translate into higher valuations (done consistently, mid- to long-term).
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