Why Milan is a great choice for IR-only meetings

Milan has joined the likes of New York, London and Hong Kong in the top 20 global roadshow destinations for the first time since IR Magazine started compiling the lists – which make up part of the annual Global Roadshow Report – in 2011.

The Italian fashion capital is joined by top 20 newcomer Tokyo, while Philadelphia makes a return to the list, having featured from 2013 to 2015 but dropped out of the ranking in 2016. Milan inches into the global top 20 destination list as well as the top 10 cities for European companies.

The research, which draws on the responses of 750 IR professionals in Q2 and Q3 2017, details how often companies go on the road, who with – and where. 

Gianmarco Bonacina, an equity analyst covering European stocks at Milan-based Equita, tells IR Magazine the city’s rise as a roadshow destination is more about increased coverage of Italy – which dropped off after the financial crisis – than the city necessarily becoming a more interesting place in terms of investment opportunities. 

‘If you look in terms of the country itself, it has been always very healthy in terms of savings – Italy is one of the top European countries by savings,’ he says. ‘The mutual funds have more than €500 bn [$616 bn] in assets and then you have the insurance companies, so I would not correlate the increase in roadshows with an increase in assets managed in Italy. I just think companies are realizing that in terms of the size of the investors, Italy is probably similar to France or Germany.’

The Garanti story

Handan Saygin, senior vice president of IR at Turkey’s Garanti bank, had been visiting Milan roughly every other year for the past decade, but three years ago she decided to increase this. ‘In the last three years, we have been regularly attending the UBS conference organized in February. It is a one-day event where we get to meet with not only the Italian investors, but also ones from other European countries,’ she tells IR Magazine. 

Travelling with UBS, Saygin says she typically meets with ‘Eurizon Capital, an investor with $370 bn [in assets under management], Anima’s emerging markets portfolio manager, Pioneer Investments [which was acquired by Amundi in July 2017], J Safra Sarasin from Zurich and London-based Italian fund managers.’

Saygin describes this year’s UBS conference as ‘a very efficient day’ when the bank met ‘more than 10 funds face to face.’ Milan, she says, ‘is an easy-to-get-to, convenient and nice location where we get to meet a variety of European financials investors. Some investors even fly over from London and the US to [the UBS] conference and combine that with a weekend ski escape.’

Leaving management at home

If you’re thinking of adding Milan to your roadshow schedule, Bonacina says it’s a city to visit once a year, not once a quarter – and an excellent IR-only roadshow destination. The majority of the 30 or so investors based there are generalists, he says, at least as far as companies of at least €5 bn in market cap are concerned. 

‘It’s not like London, where everything is very specialized,’ he explains. ‘Even the biggest managers are mainly generalists, with very little sector focus because they normally manage just one product.’ This means that ‘when companies come to Milan there is always a little bit of interest because the fund manager is interested in different sectors.’

There is less of a focus on small and mid-caps among Italian investors, however. ‘Normally when we organize a roadshow for a company of €5 bn, €10 bn or more in market cap, we will have maybe five one-on-ones and a lunch with 10-15 people,’ Bonacina says. ‘When we have a company that is €1 bn in market cap – which normally we do not because we tend to focus on €3 bn or more – it might be tough to get a full day.’ 

The city’s generalist approach also means investors are happy to meet with the IRO the first few times, explains Bonacina, adding that the investment decision process among Milanese investors is not very long. ‘Normally the IROs are very good and I would say that 90 percent of the roadshows we do are IR-only,’ he says. 

In fact, he says many investors in the city are ‘a little less sophisticated’ when it comes to meetings and questions directed at issuers – except in some cases or where it’s a very large firm that’s likely to already be in the portfolio.

‘Certainly for mid-caps, I think it’s better if the IRO comes to tell the equity story,’ he says. Instead, he recommends bringing senior management along on the fourth, fifth or sixth trip.

A complicated panorama

Like elsewhere in Europe, corporate access in Milan is impacted by the wide-reaching Mifid II regulations, which came into force across the continent on January 3 and into effect in Italy on February 15. Paola Carboni, another equity analyst at Equita – this time covering Italian firms – says this means there may be investors that have declined to pay for roadshow access. 

‘When companies ask us to set down the agenda for a roadshow in a certain city, not just in Milan, we have to be aware of investors that are reachable and those that are not,’ she tells IR Magazine. ‘If the company wants to see an investor that is not dealing with us, it’s a bit of a problem because we can’t do anything for it. We’d have to say, Listen, we can’t contact this investor – we can only leave you a slot free in the schedule and it will be your own task to contact the investor and arrange the meeting.’

But Milan is a city where Carboni says ‘the panorama of Italian investment houses changes very frequently. We have mergers and people move to new firms so you really have to know who are the biggest and the most important people to contact, because this is an always-evolving scene.’

She also echoes Bonacina’s comments on the generalist approach of most investors: ‘Though there are very qualified investors with a greater focus on a few stories, where they would absolutely want a one-on-one meeting, the majority prefer to see companies at a conference or a group meeting.’

Equita holds two European conferences in Milan each year – one in May and one in November – and Bonacina says that over the last decade or so, more banks have followed suit. ‘Our experience is that if companies come once, they tend to come again,’ he says.