How has the Approach to Corporate Access Changed after MiFID II?
Just like the world of celebrities, there is an issue of access control in the investor’s community too. So, when it comes to the investment field, the question of corporate access is the one that needs to be answered. This concept is, essentially, related to the meetings between managers of a corporation that trades publicly with institutional investors. In fact, it’s the people running businesses who are interacting with a number of people who are considered to be putting a lot of money into the company.
In the post-MiFID II environment, it is important that management takes a proactive approach for shareholder targeting and corporate access strategy. This newly implemented regulation aims at improving fairness and transparency and has changed the way in which many publicly traded companies introduce themselves to their desirable investors.
Before this regulation, management teams heavily depended on the circumspection of their sell-side partners in order to determine which of the investors get face-to-face or one-on-one meetings at a conference or non-deal roadshow. But, now the scenario has changed. Since various rules have been set and applying fees for each of the services offered by brokers has been made mandatory, now companies are showing reluctance on completely relying on the sell-side for their corporate access.
But, sell-side strategies aren’t the only ways for having a wider reach to potential investors. Publicly traded companies also have the facility of getting the needed assistance from investor relations consultancy firms that help to achieve far greater corporate access.
If you are looking for some tips on how managers and IROs can increase the company’s corporate access, just take a look at the below-mentioned points.
- All shareholding targeting exercises include performing a search of comparable company’s shareholder lists. This is a good start but it is important for you to read between the lines and weed out investors who don’t give importance to fundamental elements like passive and quantitative funds and also remove some of the trust companies that just collect all shares in their domain. In addition to this, also try to find some good and sophisticated investors who don’t show up on such lists such as sovereign wealth funds as they might prove to be long term shareholders.
- After the implementation of MiFID II guidelines, most of the brokers who wish to withstand this significant change in the investor world are focused on well-trafficked regions of high commission generating hedge funds investors. Consequently, less focused areas will be increasingly neglected by the sell-side due to the decreasing economic value. Thus, you should take an initiative to target and traverse these regions on your own in order to maintain your visibility at less concentrated regions too. You will most likely to be benefited by this initiative because the majority of the investors of these regions are institutional investors or mutual funds which tend to make long-term relationship approach for investment.
- In some cases, large mutual fund companies are already developing internal corporate access teams so that they can directly deal with company management and set up meetings at their offices by completely bypassing brokers. To handle such instances and fill in the gaps of brokers, management has to take control of their own schedule so that it can engage long-term shareholders.
So, these are some useful tips to help you increase corporate access. For any assistance or guidance about corporate access issues, you can always take the route of reliable investor relations consultancy firms.