What could be better for a spring listing than some yellow Dutch tulips? That was the flora offered up by Netherlands bank ABN-Amro as it launched its Big Board-listed ADR in late May. ‘Being Dutch, we didn’t go wild,’ demurs Frans Bedaux, head of group IR and chairman of the International Investor Relations Federation. ‘But the key is to attract attention, and we definitely got it with our tulips.’
Of course ABN-Amro has a lot more to offer investors than the flowers it handed out on Wall Street. A huge financial group represented in some 70 countries, ABN-Amro took a full two years to reconcile its accounts to US Gaap – ‘the first and most difficult step,’ says Bedaux. Once the SEC was satisfied, it was on to the exchange, depositary JP Morgan, and endless lawyers and accountants.
‘Finally, we decided that an NYSE listing without a secondary offering is like a pub without beer, as we say in Holland,’ Bedaux chuckles. So the banking group bought back around one percent of its common stock in Europe and resold it through the US-targeted secondary offering of ADRs worth some $250 mn.
As Bedaux explains, even though the offering was tiny compared to ABN-Amro’s total value, it helped attract research from analysts among the underwriting syndicate members as well as coverage by the financial press. To add to the excitement, three teams of executives embarked on a roadshow to 24 cities around the US, reaching out to over 200 investors.
It might not seem like giant ABN-Amro needs that much of an introduction. ‘But a lot of people don’t realize that we’re by far the largest foreign bank in the US, and number eleven among US banks,’ says Bedaux. And while many large investors in foreign stocks already held ABN-Amro stock, either directly or via a level-I ADR program, it was the less familiar domestic US investors that the bank was really after: ‘The key was to get to locally-oriented investors who up until now have been focusing more on the domestic US market.’
It’s not hard to fathom the strategy behind ABN-Amro’s New York listing. ‘The main reason is that it gives us access to US capital markets in case of a larger acquisition, even though we don’t foresee one in the immediate future,’ says Bedaux. ‘Or we could make a stock-for-stock purchase rather than paying cash as we have for all our US acquisitions to date.’
Indeed, ABN-Amro has been busy in the US market. Most recently it bought Michigan-based Standard Federal. Last year it acquired Chicago Corp, and it also owns Chicago-based LaSalle banking group, along with European American Bank based on Long Island. Plus, it has eleven of its own branches in the US.
All in all, some 20 percent of ABN-Amro’s business comes from the US. ‘It’s great to operate different businesses under different brand names, but it works against us in terms of overall visibility.’ Hence the US IR push with New York-based Taylor Rafferty backing up Bedaux’s three-person team. ‘IR is a big priority. Done well, it has a positive impact on the cost of capital.’
Bedaux notes that when he arrived in ABN-Amro’s investor relations department, some 70 percent of the company’s stock was in Dutch hands. Now it’s down to 60 percent, and over time he hopes to bring it down to 50 percent. He would like to see greater US ownership, around 15-20 percent, but realizes after four years of extensive roadshows in the country that it’s a long-term process.
Dutch companies came late to the IR game, Bedaux notes. Until the end of the 1980s the profession didn’t exist in the Netherlands, but since then he and his compatriots have made up for lost time: ‘It’s an important goal to really sell the company through IR, to get the company known by a lot of investors,’ Bedaux concludes.
