Ronn Bechler, the man behind one of Australia’s leading investor relations advisory firms talked about how his team helps steer companies in the volatile world of capital markets to increase their reputational and market value.
How did it all start?
I established Market Eye in August 2007, just prior to the GFC, as there was an obvious gap in the market in terms of the strategic support and advice available on the investor relations front.
It was an interesting space at the time, and certainly in its infancy. Back then, public relations firms had positioned themselves as investor relations experts, and a few former stock brokers had set up their own “one-man band” practice. But neither had the specialised skills required to support high growth companies at a corporate level.
We are now the leading investor relations advisory firm providing investor relations, media and communications advice, as well as shareholder ownership, perception studies and other market intelligence tools. This combination of services makes us very unique.
What makes Market Eye distinctive in the market?
Talented people drive this business. We seek and employ the best people with great technical and analytical skills and experience. We also have first class proprietary systems and processes, and continue to invest in our systems to be able to add more value and deeper insights for our clients.
Clients expect our team to really understand their business, offer a proactive approach and deliver tangible results, like helping them evolve their register.
What is the future of investor relations?
There are a few interesting things playing out. Companies are relying less on brokers. Continuous disclosure regulations are constantly changing and Boards need to be particularly careful around disclosure given the rise of class actions.
Proxy advisors are growing more influential and vocal, changing the way Boards engage with key shareholders in the lead up to shareholder meetings. There is a lot more institutional offshore money available with a global investment mandate and long-term investment horizon, and getting support from the broking community for offshore roadshows is a real challenge for anyone other than the very largest ASX listed companies.
Accessing the right type of capital is important, and a properly thought through strategy and successful execution of that strategy is key for a listed company to build market support and ensure its stock is fairly valued.
What are the benefits of IR advice?
Boards and management need to understand how the market perceives their company, what their register looks like and who is on there, how it’s changing, the level of influence of proxy advisors and what the market earnings consensus is versus internal management forecasts. This deep insight is crucial for a listed company to make sound strategic decisions and provides a convincing return on investment.
There are some activities that are better outsourced, or at the very least supported by a strategic capital markets adviser.
What are some of the offshore trends?
The United Kingdom is more about larger cap stories. Asia now has a number of new funds focused on small cap funds. There are “good” hedge funds in Hong Kong that invest family office money with a long-term investment horizon, essentially long only funds with no benchmark index. You certainly have to pick and choose, but you can get some very good support from the region.
In Australia the market is evolving. There are plenty of people leaving the sell-side and moving to the buy-side. People want to invest now instead of writing about companies, so we are seeing a structural shift as the broking model evolves and more funds flow into the system due to compulsory superannuation. Locally we have a very active institutional fund community and it’s our job to know who is who, and develop very close relationships for the benefit of our clients. It is all about trust and access.
What are some of the challenges on the horizon?
There are a few challenges but none of them should be a surprise. For example, for many companies at the moment it is getting harder to get broker research coverage. The changing commission structures and how companies access institutional money are two themes that also immediately come to mind. The changing regulatory environment in Australia will always keep Boards on their toes.
What are the lessons you have learned along the way?
There is a need to ensure that we really understand what our clients’ growth strategy is and, that we are viewed as a key member of their management team. It’s the key to our success. Our goal has always been to quickly establish ourselves as a trusted advisor.