* Companies race to woo investors while sentiment still
* European IPO issuance tripled in first half of the year
* Specialist organisers enlisted for $330,000-plus roadshows
* Extravagance spurned in cost-conscious post-crisis era
* Investors more wary after recent listing disappointments
(Adds banker quote)
By Freya Berry
LONDON, Aug 14 Going on the road isn't what it
used to be for investment bankers hawking shares in companies
seeking a stock market listing.
Gone are the days of the private jet and the two-week
carousel of five-star hotels in Europe and the United States.
Instead, it is more likely to be a scramble from Hong Kong to
New York, often flying on commercial airlines, to capture the
ear of potential investors.
Companies looking to woo prospective shareholders are in a
rush to get their stock listed while market sentiment is still
positive, conscious that rising tensions in Ukraine and the
Middle East could weaken investor appetite.
Anxious to reach market before their competitors, company
executives and their bankers are embarking on whistle-stop tours
of financial hubs such as London, New York, Boston and
Singapore, each costing 250,000 euros ($334,000) to 350,000
euros or more.
"You're getting to the market much quicker before a window
might close," said roadshow project director Fallon Painter,
citing the example of Russian hypermarket chain Lenta,
which squeaked through its initial public offering (IPO) the
same week that Russia entered Crimea.
Painter is the investment banking world's equivalent of a
rock band's roadie. The company for which she works, Media Tree,
is hired to organise and run the investor roadshows at which
companies pitch their stock.
Bankers are expecting a busy second half after strong equity
markets helped European IPO issuance levels to more than triple
in the first half of 2014 against the same period last year,
with 130 companies selling $41.2 billion of new shares - the
highest since 2007, Thomson Reuters data show.
The wave of issuances helped to compensate investment banks
for weak trading revenues, with Goldman Sachs, JP Morgan
and Deutsche Bank taking the top three
positions for European IPOs by deal value.
TIME AND EFFORT
With such a large number of IPOs, companies are battling for
investors' time and bankers sometimes try to steal appointments.
To avoid such shenanigans, which can cause problems with rivals,
roadshow companies are hired to deal with scheduling problems.
The IPO process has also become more tricky post-recession
because of increased regulatory scrutiny, lower fees and larger
numbers of banks running deals, a former IPO banker said.
"The amount of time and effort has increased," the banker
said. "(But) face to face meetings are still really important".
The emergence of large institutional investors and growing
pools of private wealth in Asia and the Middle East has also
expanded the number of cities that need to be visited, meaning
that management teams sometimes split up to cover more ground.
But such a division of labour can be counter-productive,
says Aquico Wen, a former Legg Mason fund manager and founder of
Asia-focused fund firm Victoire.
"An investor gets an incomplete picture of the management
team if the chief executive heads one delegation and the chief
financial officer another," Wen said.
Businesses wishing to list also face a tougher sales pitch
following poor aftermarket performances from the likes of
British retirement group Saga and Spanish industrial
testing company Applus, which have made investors
increasingly choosy about which offers they back.
CRUCIAL SALES TOOL
While some bankers privately grumble at the monotony of
seeing the same presentation and often hearing the same
questions in multiple locations, there is general agreement that
the roadshow is a crucial part of the IPO process.
A company's management needs to be able to present well and
answer questions competently to win over investors.
"When a deal is difficult, there's nothing that sells a
company better than a good management roadshow," one former IPO
For Marcus Bray, managing director of roadshow and creative
agency Imagination, there are parallels between his current job
and his previous life as a theatre producer.
"Issuers and the banks really want to find a way of
differentiating themselves and telling their story," he said.
The tight timeframes and pressure to see as many investors
as possible leaves little leisure time on tour for companies and
their advisers. "They can be doing 20-hour days. The only time
they're catching any sleep is on the flight," Bray said.
A cost-conscious image has also become more important in the
post-crisis era - hence the decision by some firms to eschew the
once-ubiquitous private planes and luxury hotels.
Logistical problems are also common.
The management of stock market operator Euronext
was caught up in a recent taxi strike while in London, prompting
Media Tree's Painter to consider putting them on bicycles.
"We didn't know how well that would go down with management,"
she said. "In the end we put them on the London Underground."
(1 US dollar = 0.7486 euro)
(Additional reporting by Nishant Kumar and Yousra Elbagir;
Writing by Carmel Crimmins; Editing by David Goodman)