In a COVID-focused world, changes to corporate access have increased efficiency for IROs, management and investors. The current situation also offers IROs a chance to take a fresh look at targeting and marketing and how to use management time.
After a deep collective ‘gulp’ in March, the sell-side pivoted quickly to all virtual conferences and non-deal roadshows (NDRs). As IROs, management and investors raced to figure out Zoom faster than their children did, the sell-side tried to land on the optimum call length and how to make tech platforms and dial-ins work for global investors.
Several months on, it looks like much, if not all, corporate access is set to remain virtual until at least early 2021. Company travel has been curtailed and few companies are likely to open up their offices or operations to outside investors before the end of 2020. For the most part, while it remains keen for some face-to-face interactions and site visits, the buy-side is not yet in a position to travel or host meetings.
Meanwhile, the sell-side is waiting for governments to pronounce on the health implications of larger gatherings before making decisions on conferences, leaving the distinct possibility that hybrid conferences may be the way of the future – or at least the reality for 2021. From early indications, the new reality may need to involve smaller numbers of in-person meetings, with wider access to post-conference webcasting of the content.
In the early days of COVID’s appearance, investors were consuming as much information as they could. A financial institutions conference hosted in mid-March by RBC (which normally takes place in New York City) was one of the first out of the gate in virtual format. All the banks moved rapidly to adopt virtual formats and most conferences went ahead, with strong attendance.
Banks also moved to help IROs hold one-off virtual company calls moderated by the sell-side. This format allowed investors to get answers directly from companies on how they were addressing the challenges of COVID and what the financial implications might be.
The ease of access and transparency addressed investor needs. The quality of interactions was generally deemed to be good and, as a result of a move to group meetings, the volume of interactions was high. Now, with ‘access overload’ setting in and non-deal roadshows resumed at a more normal pace, investors are more focused and strategic in their asks. Some investors are moving away from joining larger group calls and looking to get back to smaller groups or one-on-one meetings.
As we navigate new circumstances, there are some clear opportunities for IROs.
IROs can prioritize and target more (and better). Traditional non-deal roadshows are city-based but this doesn’t need to be the case in the current environment. If you are organizing meetings yourself, you have more scope to focus on your top targets, wherever they are. And while ‘city-based’ NDRs (i.e. a ‘Boston’ day) make it easier for the sell-side to avoid overlap and easier to ‘make the brokers happy’, going virtual provides an opportunity to be more efficient with our time and avoid adding a meeting to ‘fill the day’. With management capacity for calls often topping out at four to five hours per day, it is important to decide which investors you most want to engage. Challenge the sell-side to think more about how to structure thematic days and target lists by sector or investment style outside your core cities. Focus your time on those that can adapt and do your own thinking about how to evolve your target list.
Watch for incoming interest from the buy-side from places you don’t normally visit. Generalist fund managers are competing with global peers for access in the current environment. This will also mean that larger investors in less frequently travelled locations may be getting more access and that smaller investors in more heavily travelled cities get less. Keen investors not getting allocations through the sell-side are more likely to reach out directly right now and may turn out to be there for the long-term.
Speak to your sell-side about the upcoming virtual conference schedule for next year so you can maximize the value you get from conferences. Investors who are less prone to attend conferences are seeing the virtual format as more efficient as they can attend only the sessions they want. With more incoming interest from investors outside North America, this is a great opportunity to use your time more effectively and determine how real that interest is. Make the sell-side aware of where you see problematic overlaps of virtual or hybrid events that may make scheduling difficult. This kind of scheduling has often been a challenge in January, mid-June and September but may be even more so in 2021.
Have a moderator on all calls, especially if you are not going to insist on video and allow more people to attend. The new format is a double-edged sword. Some investors are less willing to ask questions on a large call but the chance of a question ‘from left field’ may cause more anxiety for you or management. Eliminate that risk by having a moderator: yourself or a sell-side analyst whom you trust. Work from a prepared Q&A, get questions in advance and use a platform that allows you to mediate the questions in the same way as an earnings call. If you are doing smaller groups, insist on video. Use your role as moderator to make the conversation two-way and ask some questions of investors on the call.
Think like a marketer. Your website has never been more important as a source of content for new investors. Consider updating your investor presentation and adding archived conference webcasts. Think about how video might substitute for a ‘site visit’. And make sure investors know how to contact you!
Virtual is likely here to stay as part of the IR program, so plan for it. There is no doubt that IROs are missing the chats by the elevator with investors and the insights from being with management 24/7. For management, some of the initial five-hour, audio-only days while locked in home offices have felt long. However, as schedules have evolved closer to a maximum of four to five meetings per day and IROs have tried to coax investors to use more video and engage more on calls, the virtual format has proven that it can be efficient. It is easier to get time in management diaries and there are far fewer logistics with which to contend. Some companies are even considering how to use the new format to introduce occasional or gradual access to divisional management. Now that IROs have gotten over their initial fears, developed views on what technology works best and determined how to negotiate time differences, the biggest challenge in a cost-conscious and COVID-conscious environment may be getting management back on the road again in 2021.
Virtual or hybrid corporate access will likely remain a permanent feature of IR, allowing smarter targeting and more efficient use of time in some cases – so plan for it now!