Demand for North American Equities is Strong
- The political uncertainty in the Eurozone, as we await the outcome of yet another EU Summit as well as a combination of macro factors, are contributing to heightened interest from European investors in North American equities.
- From the end of the third quarter 2011 to the end of the first quarter of 2012, European investors have been net buyers of North American stocks to the tune of around $30 billion dollars.
- Over the same period, the proportion of the aggregate European investment portfolio attributed to North American equities grew from 19% to 22%.
- Combine this with anecdotal information we have heard from the market such as an increase in the volume of meeting requests US companies are receiving from investors in London and the case on paper for a road show to Europe is strong.
Key Markets for European Investor Meetings & Roadshows
- But who holds the money in Europe and, more importantly, which investors have the appetite for North American equities?
- To put the European market in perspective total European assets stand at $7.7 trillion with just over half of those managed on an active basis. Put another way, that is around half the size of the North American market overall but only just over a third the size if you are only considering the active portion (i.e. the proportion that can be influenced by investor relations).
- London is typically the first stop for US companies road showing in Europe . . and deservedly so, considering not only the absolute number of firms and the depth of the asset pool but also because of the overall propensity to invest in North American equities.
- A trip to Edinburgh is often combined with a London roadshow and with the concentration of large long only managers with significant pools of assets such as Baillie Gifford and Walter Soctt. Companies can also be very efficient in Edinburgh as most of the top firms can be covered in just a one day trip.
- Interestingly, assets of French investors in North American companies are proportionally much lower than the rest of Europe coming in at 17% vs the average of 22% for the region. Combine this with the fact that French investors have seen the strongest redemptions during 2012 (according to Thomson Reuters Lipper) and it hardly strengthens the case for Paris as a potential roadshow destination.
- Germany is another market where companies can be efficient in tapping into the capital. In Frankfurt, there are 4-5 firms that would generally warrant management access or a one-on-one meeting with IR such as Deka or DWS as well as a number of others that could be met in a group meeting setting to round out a trip.
For more information on the key markets and buy side institutions as well as practical tips on engaging investors in Europe please contact email@example.com or go to IR Hub on your Thomson One terminal.