TAV Airports: Moving forward on Mifid II

Mifid II might be a European directive but its reach extends beyond the EU with IROs across the globe taking note when it came into effect. In Turkey, Nursel Ilgen, head of investor relations at airport group TAV Airports – which operates the giant hub that is Istanbul Airport – says she has seen the number of analysts covering the TRY8.2 bn ($1.7 bn) market cap company fall in recent years. Varied factors – from declining commissions to analysts and sales people moving to corporate positions, and a recent spate of IPOs in Turkey that has taken up the attention of many on the sell side – have contributed to a drop in TAV’s coverage, says Ilgen, specifically over the past three years. 

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In many ways, Mifid II actually spurred Ilgen and her team to tackle that problem. The regulation came into effect in January 2018 (having been delayed by a year) but it was on Ilgen’s radar back in 2015 and the company has been proactive. ‘We were discussing the [potential] impact of Mifid II with corporate access teams and analysts a long time ago,’ she explains. Despite seeing a ‘flat to slight decrease’ in the number of investors at conferences since the regulation came into effect, Ilgen says there has been little impact on roadshows ‘as brokers reach out to investors on our target lists, even if they are not clients.’ 

What TAV has seen increase is direct engagement from the buy side ‘either directly from the portfolio managers or from buy-side analysts. The questions are usually related to organizing meetings or conference calls, as well as company specific questions,’ Ilgen says, while ‘brokers are demanding more C-level access at meetings.’ 

Of course, TAV is one of the largest companies in Turkey, with a corporate governance committee and senior management well briefed on Mifid II and ‘fully committed to supporting IR to overcome the challenges’. That might not always be the case at smaller companies, though, and these are the firms expected to take the biggest hit on corporate access and research coverage. So what else could IROs have up their sleeves? 

‘We hear that some companies are organizing capital market days in London and directly interacting with investors – without any brokers,’ says Ilgen. This is not something TAV is thinking of doing at the moment, but Ilgen does say she would consider this option in the future. 

In the future, she expects to see an increase in ‘direct contact from small and medium- sized investors [and] a decrease in the number of conferences offered by small/domestic brokers abroad. Also, we may be organizing our roadshows internally, which may require additional personnel regarding logistics – which means more time and resources.’ 

And the targeting continues. ‘We are always trying to reach investors on our target lists,’ says Ilgen. ‘And we always have a target to increase research coverage, which we managed to do this year, with ICBC initiating coverage in our company despite Mifid II.’ 

This case study has been taken from the IR Magazine Research Report: IR Objectives & Challenges. Click to download now