The Rise of the Buy-Side Internal Corporate Access Team
Published on Sep 11, 2017
In much of the talk about the ramifications of MiFID II the focus has been on a likely reduction in the number of analysts employed by the sell side and a downsizing of corporate access teams. Yet, alongside the predicted restructuring on the sell side, there is an alternative employment trend that is not gaining as much attention - the rise of the buy side internal corporate access team.
Until recently only a handful of the very largest asset managers have been focused on building out their own internal corporate access capabilities. For the firms at the forefront of creating these teams, the overall goal was to bring a greater level of sophistication and efficiency to how broker resources were consumed while also starting to build the capacity to organize corporate access independent of the sell side.
With the advent of MiFID II the ability for asset managers to arrange their own corporate access has taken on greater significance as firms are clearly thinking more broadly about how they are going to organize, consume and pay for meetings with management. This has led to a wider number of firms, joining the initial pioneers in setting up their own internal corporate access teams.
The typical responsibilities of these internal corporate access teams in many respects mirror what has traditionally been the role of sell side corporate access teams. The teams are broadly tasked with the origination and management of direct to corporate bespoke field trips and site visits, road shows and conference calls and sit between the investment professionals and corporates they want to engage with. Whereas in the past, asset managers would have turned to the sell side to organize a “reverse roadshow” on their behalf, they are now looking to arrange these bespoke trips independently and it is the internal corporate access teams who are taking the lead and bringing greater levels of expertise to the process.
The role though extends beyond ensuring the logistics of proprietary events run smoothly, with a key responsibility being relationship building with corporates. Asset managers are actively looking to strengthen their corporate partnerships and are placing far greater strategic importance on engagement with the investor relations community. Again it is the internal corporate access teams that are leading this initiative.
Although asset managers have always employed coordinators to help manage the calendars of their investment professionals, as the demands and sophistication required for the role increase, the profile of individuals targeted for the new roles has correspondingly evolved. It is probably not a surprise that typically, ex-sell side head of corporate access are being targeted to lead these new teams. This is an obvious move as the required skillsets are closely aligned; ability to work with multiple stakeholders across geographical locations; originate high value events and build relationships with corporate IR teams and management, are all fundamental requirements of the role. The expertise these new hires are bringing to their new employers is gradually helping the respective firms reduce their reliance on the sell side in the provision of corporate access. In a world where corporate access is paid for, the cost and effort required to build these teams is seen as being well worth it and as one fund manager from a large, global firm commented to us “Why should I pay a broker to organize a meeting with management when I already hold a 3% stake in the company”.
Although at the moment, it appears this trend is limited to the very large asset managers and sovereign wealth funds who can justify the cost associated with building an internal corporate access team, it is clear that a greater number of firms are planning to adopt a similar approach. In the longer term this movement will be a significant factor contributing to how corporate access is organized and consumed, but in the short-term we see two main outcomes - 1) IR teams are going to start to see a lot more requests for direct engagement from the larger asset managers and 2) There will be a continued movement of good quality senior corporate access personnel on the sell side bringing their expertise to buy side roles.
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