Changes to Corporate Access

Last week we provided a summary of the recent IR Magazine Corporate Access report looking at how companies and the investment community engage and IROs’ and investors’ thoughts on the different methods. This week we take a closer look at the report’s findings relating to changes in corporate access. The report mentions that over the past few years there have been significant changes to corporate access and that an increase in regulations “has limited the opportunities for access in some areas, while technological and service developments have increased opportunities elsewhere.” Click here to view the full IR Magazine report.

IROs

Direct contact

Globally almost 80% of IROs said that they were more likely to reach out to investors directly over the past few years and only 4% said that they are now less likely to reach out directly. 75% said that they were more likely to respond to direct contact than a few years ago, with only 1% saying that they were less likely to respond.

Corporate access changes

IROs noted an increase in direct contact and engagement from the buy-side and commented that less importance is now placed on sell-side corporate access. They also commented on changes relating to remote working and technology as well as MiFID II. In general they had a positive outlook.

BUY-SIDE

Direct contact

Over 60% of buy-side respondents said that over the past few years they have become more likely to reach out to companies directly, with 54% saying that they are now more likely to respond to direct contact from companies. Only 8% said they were less likely to reach out to companies directly, with just 4% commenting that they were less likely to respond to direct company outreach compared to a few years ago.

SELL-SIDE

Changes to corporate access workload

Globally, the sell-side noted that the volume of work for their corporate access desk had increased by 70%. The increase was most significant in Europe, where 92% of respondents considered that there had been an increase in the workload for the corporate access desk and least notable in North America where 60% noticed an increase, but 35% saw no change.

This trend was established before the COVID-19 pandemic, but was slightly less significant in Europe prior to the pandemic, with 71% noting an increase at that stage. However, the increase was more pronounced in North America before the start of the pandemic with 87% saying they had seen an increase in the volume of work for their corporate access desk before the start of the pandemic.

Changes to buy-side engagement

Globally there is a relatively even split between those expecting their relationship with the buy-side to change and those who do not anticipate a change. However in Europe only 13% foresee a change, with almost half expecting no change, whereas in Asia 50% expect there to be a change in their relationship with the buy-side.

THE RISE OF DIRECT CONTACT

Direct contact level and appreciation

The report states that the most significant finding is the “importance of direct contact between company and investor, how appreciated this is by both parties and how much this has changed over the past few years.”

Direct contact is the second-most common method of arranging meetings after sell-side corporate access and IROs are very positive about it, with 84% giving a satisfaction rating of eight or above out of 10 and within that number a third giving a score of 10/10 for satisfaction. This is closely linked to the fact that 73% of the buy-side are more likely to take a meeting if arranged directly by the company.

Changes in direct engagement

79% of IROs noted that they are more likely to reach out to investors now compared to a few years ago. Investors view this positively, with 54% becoming more likely to respond to direct approaches from companies. Investors have become more proactive with regards to direct engagement. Over 60% are now more likely to reach out to companies directly. This engagement has been welcomed by IROs, with 75% having become more likely to respond to investor outreach recently.

Comments on direct engagement

Direct engagement is seen as a new reality in the changing face of corporate access and on the whole this is viewed positively. The slight reduction in sell-side corporate access is viewed neutrally, with IROs and investors focusing on the new opportunities provided by direct engagement and, primarily in North America, the development of buy-side in-house corporate access desks (as an alternative to direct contact). However, the report found that IROs and investors do value direct engagement.

If you would like any advice on how to react to changes in corporate access and how to engage with the buy- or sell-side, please get in touch with our team at Miranda IR and we would be happy to help.

The report is based on findings from the IR Magazine Global Investor Survey carried out in Q4 2020 and the IR Magazine Global IR Survey in Q1 2021.

350 IROs were surveyed, coming from North America (45%), Europe (30%), Asia (13%) and the rest of the world (12%). They represented a wide range of sectors and were relatively evenly split between small, mid- and large cap companies, with 11% representing mega cap firms. The 149 investors who took part came from North America (37%), Europe (24%), Asia (35%) and the rest of the world (4%) and were slightly weighted towards the buy-side with a 56%:44% split with the sell-side.