Virtual roadshows: the new normal?

Article rédigé par Euronext

Pexip enjoyed one unusual advantage in striving for digital triumph. The very process of the roadshow – coping with the coronavirus lockdown by meeting potential investors via video link – was an advert for its services. It’s a videoconferencing company, which used its own technology to facilitate the exercise with admirable smoothness.

Later that month Europe experienced another landmark event. The coffee company JDE Peet’s floated on Euronext Amsterdam, after the first virtual roadshow to raise more than €1 billion for a European listing – the company secured €2.25 billion. But this development isn’t limited to Europe. Across the Atlantic, the US recording label Warner Music raised $1.9 billion on Nasdaq in June after a virtual roadshow. Three months earlier, television production company China Bright Culture Group had adopted the same approach for its HK$904 million (US$116 million) IPO on the Stock Exchange of Hong Kong.

Is this the shape of the future? “We think so – up to a point. Even after the coronavirus restrictions are over, we believe people won’t return to the old habit of travelling from country to country to market their IPOs – at least not entirely” according to Camille Leca, Chief Operating Officer Listing at Euronext. “We predict that the standard IPO that’s aimed at an international audience, or that has retail investors in mind, will be a hybrid between the old face-to-face model and the new digital way of doing business. In most cases corporate executives and their bankers will still meet some people face-to-face, but they’ll encounter others virtually. That includes investors based in countries far from the company’s main investor hinterland. It includes retail investors.” It also encompasses people who aren’t available when the roadshow hits their country.

A happy hybrid model

One obvious merit of this hybrid system is that it allows companies to increase the number of potential investors they market to. But there are other advantages. By cutting out the travelling for its NK2.394 billion (€217 million) IPO, Pexip saved the annual carbon footprint of 10 Norwegians. It also saved more than 1,700 hours of travel time – much of it the time of senior Pexip management, which could be spent instead on making the company better.

“We think companies will adopt the hybrid model for the full range of investor relations events. That’s easier to do because the technology has become more sophisticated” says Camille Leca. For example, Euronext’s corporate services department has developed new services since the beginning of the year to assist clients in taking their capital raising and investor relations virtual. One of these is a virtual webcasting service that can check whether someone joining an AGM virtually is a shareholder with the right to do so. Another is virtual roadshows, a solution that enables teams to conduct effective virtual roadshows through a secure platform, via on-premises webcasts, in-studio webinars or virtual conference room webinars.

“But we don’t believe that roadshows will stay entirely virtual. There are advantages in pitching face-to-face”, continued Leca. “It’s easier to hold someone’s attention, and to know whether you’re doing so. Face-to-face conversations are also good for networking: building relationships that generate opportunities beyond the particular task at hand”.