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Virtual events: They are here to stay, and corporates should use them to increase direct engagement with existing investors

1 year ago · 3 MIN READ
#Unbundling  #Roadshow  #Investor access  #schedulR  #InvestorEngagement 

SUMMARY

Virtual events like roadshows are here to stay simply because people realize they actually work, are cost-effective, and rather simple to organize. Brokers are happy to host and sponsor virtual events, but corporates should leverage the advantages of virtual events and take a more proactive role in investor engagement, especially with existing investors, where trust has already been established. However, when reaching out to new investors, virtual and live events organized by a broker (or other third parties) are still superior.

DETAILS

Virtual events are here to stay, because they work, are cost-effective and simple.

Covid has put a sudden halt to all live roadshows, meanwhile rising uncertainty tremendously increases the need to update investors. Mostly this can be done via '1-to-many' channels like press releases, quarterly reports, webcasts and conference calls. However, institutional investors are accustomed to '1-to-1' and '1-to-few' interactions to address specific issues that are not suitable for these '1-to-many' channels. Live roadshows currently being not a feasible option, investors and corporates are forced to give virtual events another try. And people have learned that conference calls and video conferences actually work, at least much better than many had anticipated. Clearly, increasing availability of better technology (Zoom, Microsoft Teams) is helping, too. In sum, overall acceptance of virtual events has massively increased in recent weeks.

Virtual meetings also have a number of additional advantages: They are easier to organize (no logistics, no restrictions to one day or one city) and also come at a considerably lower total costs (no flights, hotel, travel, transport, meeting rooms, catering). Additionally, they offer a 'sustainability advantage'.

Brokers are happy to host and sponsor virtual events, …

Brokers are for now very happy to organize virtual events, not the least thanks to the lower cost, which makes their corporate access activities look slightly more profitable (or rather less unprofitable).

This might be temporary, as troubled asset managers may further reduce the fees they pay brokers for corporate access once they realize they mostly get conference call dial-ins and invites for video conferences. Additionally, sourcing a virtual event directly from a company for most investors - and the corporate access teams some of them have built - will only be an email or phone call away. Still, let us ignore this for now.

… but corporates should use virtual events to take the lead with existing investors.

Over the last years investor engagement, i.e. organizing interactions with suitable institutional investors has become increasingly difficult as brokers have reduced their offering of broker-sponsored events for regulatory and commercial reasons. Many companies still cling to 'broker-sponsored events' - mostly for budget reasons and because they lack the processes and data to do it on their own. Still they often complain about weaker schedules and increasing organizational hazzles to accommodate investors that have no commercial relations with the broker sponsoring the event.

The increased acceptance of virtual events, which are easy and cheap to organize is a game changer. This especially applies to engagement with existing investors, where the focus is on communication and discussion of facts, as trust is already established.

In such an environment it seems obvious that corporates should take a more active approach in investor engagement with existing investors, i.e. reach out directly to them with offers for virtual meetings after financial results and other material news flow.

Such investor engagement becomes even easier if corporates use software with workflows built exactly for situations like this: offer your prioritized investor base a number of slots over a number of days which they can book on a first-come-first-serve base, fully integrated in your IR CRM.

There are still many good use cases for broker-sponsored events: focus on research & new investors.

This does not mean a company should not use broker sponsored events, be it a live or virtual event. On the contrary, every company should use such events and leverage them.

A broker will produce research and engage in discussions about it with investors, which can trigger interactions with the covered company as well. So if a broker offers to organize an event to discuss the investment case with new investors, the listed company should take advantage of this to interact with potential new investors. As soon as these prospects turn into investors, the company should take over and engage with them directly.

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Kilian Maier


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