Amsterdam is a city which is full of financial contrasts. On the one hand, you’ve got open flows of capital, and on the other, tightly protected structures of capital. On the one hand, you’ve got a tradition of investment abroad and international investment in Holland, and on the other a great reliance on Dutch-based fixed-interest investment.’
So says Veerle Berbers, director of Technimetrics and a pioneer in investor relations in the Netherlands. According to Berbers, the contrasts are deep rooted in the Dutch psyche. Despite Amsterdam’s reputation for being the capital of everything liberal – with its world-renowned red light district and relaxed approach to the drug culture – she believes that the Dutch are deeply conservative and cautious in their financial dealings.
‘There has never been a revolution in the Netherlands. Compared to other European countries, change has always taken place gradually,’ she explains. ‘Take social welfare reform, for example. Whereas in France, the social welfare infrastructure is suddenly having to be dismantled because it is crippling the state, the Dutch realised the need for change ten years ago and have been dismantling it gradually ever since.’
Change is also taking place in the financial community. The Dutch, like much of the rest of continental Europe, have a tradition of investing in fixed-interest investments. But, as equities invariably bring much higher returns over the long term, Dutch institutions are – gradually – changing their investment attitude.
‘The shift has been happening over the last five to ten years and although we’re only talking about percentage points in most pension funds’ portfolio split, that translates into billions of dollars because they are investing such large amounts,’ says Lodewijk Siertsema, a senior associate of capital markets at fund manager MeesPierson.
According to Technimetrics, equity funds under management in Amsterdam in 1995 totalled $50.1 bn. And a substantial percentage of that – some $17 bn – was invested in non-domestic companies. ‘Those prepared to risk investing in equities are generally the same people who will risk investing internationally,’ adds Siertsema.
Unlike most of continental Europe, the Dutch have a highly developed pension fund industry, most of which is funded by private sector employers. With the performance of those pension funds crucial to meeting future liabilities, they have been leading the shift to equity investment.
‘A company visiting Holland on a roadshow tour should go and see all the large pension and mutual funds,’ says Dorothee van Vredenburch, founder and director of IR firm First Financial Communications. ‘That can be a bit of a logistical nightmare because they are so spread out.’
Some of the biggest funds are based outside Amsterdam. Robeco, for example, is in Rotterdam, and ABP, the civil service pension fund, in Heerlen. Moreover, says van Vredenburch, ABP would not contemplate coming to Amsterdam for a presentation. ‘It would take them a whole day to travel to and from Amsterdam which just wouldn’t be worth it for anyone less than Coca-Cola. Even then, as the second largest pension fund in the world, ABP might expect a company to come to it.’
Dutch investors based in the south would, however, go to a presentation in one of the nearby cities. A fund manager based in Eindhoven, for example, would be able to attend presentations in Rotterdam or the Hague without taking too large a chunk out of the day.
‘An ideal itinerary would be to spend the evening before in Brussels, then go to southern Holland the next morning and spend the afternoon and, if possible, the evening, in Amsterdam,’ says Technimetrics’ Berbers. Van Vredenburch agrees, adding that Dutch investors will usually be more receptive to straight presentations and question and answer sessions than lavish breakfast and lunch meetings. The liquid lunch, van Vredenburch says, is a concept that has never quite taken off in Holland. ‘You will not fill a room with people looking for a free lunch because they simply haven’t got the time to waste in the middle of the day.’
‘There is no equivalent of The Brewery {a presentation venue in the City of London}in Amsterdam,’ agrees Peter Stevense, a director at MeesPierson. ‘Investors would be much happier to go out for dinner with a company than spend half their day at a long, boozy lunch.’
So if you want to put on a big event for institutions, make sure you arrange it out of office hours. The Dutch do like to socialise but only in social time. During the day they would prefer to grab a coffee and a sandwich before hurrying back to work, stresses van Vredenburch.
Most presentations to the financial community in Amsterdam take place at one of five or six large hotels in the city centre. One of the most popular, according to van Vredenburch, is Hotel Krasnapolsky because of its central location, convenience and professional service. Even there, however, you need to check and double check that the hotel has understood your instructions, she warns. No matter how professional the service, vital things are often overlooked and a seemingly small mistake could end up costing you an awful lot of money.
‘Once, for example, I spent weeks discussing with a company – who had a reputation for being particularly unapproachable – that they should create an informal setting by having chairs around a circular table so that investors could be made to feel at ease,’ says Vredenburch. ‘I then turned up at the hotel an hour before the event to find that the room had been laid out with desks with chairs behind them in rows.’
If investors from outside Amsterdam are attending your roadshow it is worth thinking of the Hilton or the Okura which are close to the airport. The hotels have better parking facilities than the other, more centrally located Amsterdam hotels.
Although Amsterdam-based consultancies, such as First Financial and International IR, will organise the logistics of your events, the majority of companies coming to Amsterdam on a roadshow go through the major banks or through international IR consultancies such as Dewe Rogerson or Taylor Rafferty.
‘We’re not interested in just getting bums on seats for companies,’ says van Vredenburch. ‘If a company wants help in targeting the right people to see and also getting decent feedback after the event, we can then really help them.’
And finding out who are the right people to target can be a difficult business. ‘Pension and mutual funds are not required by law to declare the amounts, or the breakdown, of their holdings so using a consultancy can be a useful filter for a foreign company because they are in regular contact with the investors,’ says Stevense.
Van Vredenburch argues that some Dutch investors are not yet accustomed to the idea of being called directly by companies – or consultancies on behalf of those companies – to invite them to events or to ask them for feedback. Brokers or banks tend to be more welcome in this regard.
The larger institutions prefer companies to come to visit them. ABN Amro, for example, expects and prefers a one-on-one discussion with management. ‘It’s not a matter of arrogance or anything like that but of confidentiality. There are questions we might want to ask which we really don’t want other investors to hear,’ says Felix Lanters, vice president at ABN Amro Asset Management. ‘Having a one-on-one also creates the right kind of atmosphere for a company to be able to tailor their presentation specifically to our needs.’
Raymond Heesakker, a portfolio manager in US equities and options at PVF Nederland disagrees. ‘The financial community here in Amsterdam is so small that you can usually get a similar level of individual attention at a presentation as at a one-on-one. At the same time you benefit from contact with other investors. Certainly, if a company is new to me, I’d want to see it in a general surrounding and then, if I was considering investing, I might request a one-on-one meeting.’
In terms of investment objectives, the Dutch institutions seem united; they are all interested in solid fundamentals. ‘We are certainly not looking to take a quick profit and run,’ says ABN Amro’s Lanters. ‘We check a company’s credentials inside out to establish their core holdings before we decide to invest. But once we do decide to invest, we’re in it for the long term.’
‘We look for stability, predictability and growth,’ agrees another fund manager. ‘The size of a company isn’t of major concern, rather the quality of its financials, its management, its position within its industry, and our assessment of the overall capability of the company’.
Heesakker at PVF Nederland points out that he and his fund management colleagues are long-term investors. Around 70 per cent of PVF’s portfolio is in index-linked, quantitative funds. ‘The other 30 per cent is more aggressively managed but even then our approach isn’t short-term like in the United States. We will always invest on a long-term basis,’ he says.
It is with this in mind, perhaps, that Veerle Berbers suggests that companies who come to the Netherlands should visit regularly. ‘Once a year is probably enough but it is important for companies to demonstrate a certain level of commitment and consistency. That is, after all, what Dutch investors are all about.’
