New online system allows investors to cut out costly brokers

Jan 21, 2014
<p>Ingage launch clients include Fidelity, Nestl&eacute;, National Grid and Tullow Oil</p>

A new service aimed at cutting out the corporate access middlemen and linking companies and investors directly has gone live, boasting a number of high-profile clients.

Michael Hufton, founder of the ingage platform
'[Ingage] provides a fully compliant solution, but it’s about much more than compliance' – Michael Hufton, founder of ingage

Ingage is the brainchild of Michael Hufton, a former Cazenove partner and fund manager at Polar Capital, whose aim is to change the current ‘suboptimal’ corporate access model. ‘We have ended up with a system where we’ve essentially allowed investment banks to act as a sort of toll collector between investors and companies,’ he says.

This is a hot topic at the moment, with the UK’s Financial Conduct Authority (FCA) cracking down on the issue in a bid to end the practice of using client cash to fund corporate access. In fact, the FCA estimates that around £500 mn ($823 mn) was used in this way during 2012.

‘[Ingage] provides a fully compliant solution, but it’s about much more than compliance,’ says Hufton, who has himself been working closely with the FCA since July last year.

Cash for access isn’t the only problem with the current model, which sees both larger investors and high-frequency traders offered access to senior management, explains Hufton, while smaller funds are left out in the cold. This is an imbalance he thinks ingage can address as his service sees both corporate and institutional clients charged for access to the network.

‘This equality of treatment and equal dissemination of information really legitimizes the one-on-one meetings with big institutional investors,’ says Hufton, who believes those meetings are ‘critical’. ‘High-quality access – or engagement – with really high-quality, well-informed investors, is something we need more of post-crisis, not less. We need investors that really understand where their businesses are going and that are present and really able to hold management teams to account.’

Although the service is still in the testing phase, ingage already has a number of prominent clients, including Fidelity, Nestlé, National Grid and Tullow Oil, as well as support from the UK’s IR Society.

On the institutional side it’s ‘a pretty easy sell, because they know getting access to corporates in the past has been hard,’ says Hufton. ‘[Access has] been controlled by the investment banks, which have exacted quite a price for that.’

Institutions signing up to the ingage system will be charged anything ‘from £6,000 at the low end (a small one-man band) to £120,000 at the top end for a big, complex institution with multiple offices, fund managers, analysts and co-ordinators.’

On the company side – which is a harder sell as these firms have ostensibly received these services for free in the past – corporations would pay a £6,000 annual fixed fee to use the ingage system, though a 50 percent discount will initially be offered. For that price ‘we will organize as many events for them as they want, but the cost of the events is borne by the companies,’ Hufton explains. He adds however, that ingage is arranging ‘competitive rates with preferred suppliers’ to maximize value ‘on a cost pass-through basis. What I wanted was a platform that is completely unconflicted and genuinely neutral – and to do that you have to charge both sides.’

As Hufton says, the service is about more than compliance; it’s also about more than simple access. He believes he and his team have created a real value-add service, trying to cover every angle. The company’s cloud-hosted IT platform allows investors to ‘manage the complete universe of company roadshows, one-on-one meeting requests, profile information and feedback, all in one place,’ according to the launch press release.

Investors can also select and track the company meetings they’re interested in – with an auto-signup service for easy access – and companies can see all the interested investors and select those they most want to meet. Private, user-updated profiles are also available. ‘So if you are Fidelity uploading a profile, that won’t be seen by any of your competitors, only by the companies, and vice versa,’ says Hufton.

‘Imagine you’re a CEO on a roadshow day in the car. This can all be on your iPad, you can click to see what the institution is, who the attendees are, see their profiles. We’ve also built in some real value-add notes – such as when you last met and all the notes from your previous meetings.’ All this is offered via an encrypted, secure cloud, he stresses.

Ingage also offers the ability to host webcasts, something Hufton believes could be used to reach out to the ‘Mr and Mrs Smith’ of the retail world as well as a much wider institutional audience.

‘The [corporate access] game is changing slowly but surely,’ says John Dawson, director of IR at National Grid and chairman of the IR Society.

‘Over the last two years we’ve got into the habit of being very open with our investors about when we’re doing our roadshows, who we’re going to use to do our roadshows, and if they want to talk to us first they can put meetings in the diary and we’ll be delighted to do that. What the ingage platform does is simplify all that for us.

‘Inevitably there’s a critical mass element to it, so as it gets rolled out and developed, there is the matter of trying to ensure it gets a suitable roster of clients. It doesn’t have to be everybody but you need to have a certain number to make it attractive to different parties. It’s a challenge because it has to build that momentum – but with the investment it has made and the way the platform works, I think it’s got a good opportunity [to do that].’

The staging phase will be complete next week, and Hufton says that while ‘the UK is leading the way in regulatory change,’ he expects Europe and other regions to follow. ‘And we will go wherever the demand is.’

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