In many ways, Sydney represents an IR officer’s dream stop-off on a roadshow. The central business district is so compact it’s possible to stroll between most meetings without even hailing a cab. And when you do need one they seem to be plentiful, even in rush hour. It’s ideal for packing in a load of meetings into a short timeframe.
Here’s the downside: Melbourne excluded, Sydney is a heck of a long way from any other major center. It’s no good North American and European companies casually adding Sydney onto the tail end of an Asia Pacific roadshow without some serious consideration of the time, distance and jetlag involved. A short hop from Singapore it is not. If you have senior executives in tow then you’d better make sure the trip is worth their while.
That said, once you arrive, Sydney will welcome you with open arms. The city and its suburbs sprawl around one of the world’s largest natural harbors and the water is key to a great deal of life outside of work for many of those hurrying among the downtown skyscrapers. Rushing between one-on-ones and presentations may not leave much time or inclination to grab a surfboard and head out to Bondi, but a trip to Sydney would not be complete without embarking on one of the commuter ferries which glide in and out of the terminal between the Opera House and bridge. Failing that, sneak an excellent view of the harbor from the AMP skyscraper during a meeting.
On the Up
Australia remains a small but growing equity market and the number and size of institutions in Sydney is generally a reflection of that. It’s not to be sniffed at, though. Sydney ranks as the 25th most important equity management center in the world, according to Technimetrics’ latest figures, accounting for some $73.9 bn in equities under management. That’s up from $64.3 bn the year before. Indeed, it’s only $15 bn behind Hong Kong and accounts for more than double the amount of equities managed in Singapore.
Global equity portfolios managed out of the city, however, are few and far between since much of Australia’s international investment is farmed out to foreign asset managers. Some institutions prefer to station their own staff in other centers for foreign stock-picking – AMP, for example, has a big operation in London for that reason.
Breaking the mold, somewhat, is Bankers Trust, whose active global portfolios are managed out of Sydney. Paul Moore, head of international equities at BT Fund Management, shrugs his shoulders at the suggestion that Sydney could be considered a strange location in that regard. ‘If you’re a global stock-picker which ground do you want to be on?’ he asks. ‘The worst places to be in the world are London or New York because of all the noise. The successful investors – as opposed to traders – are those away from the noise, away from the crowd. Look at Warren Buffet out in Omaha.’
Moore doesn’t necessarily want – or expect – every company his team is interested in to drag its management team over to Sydney, though. Far from it. ‘If they’re going to be here then fine, we’ll try and get a few ideas out of them,’ he says dourly. ‘But we’re not really interested in them ringing us up. The reality is, we’re going to be ringing them up and coming to see them.’
Those sentiments are echoed by several other fund managers and analysts. And the few agencies in town plugged into investor relations issues repeat a similar story.
Ian Matheson, a partner at investor relations consultancy Orient Capital and former president of the Australian Investment Managers Association, says international companies targeting Sydney-based fund managers have maybe six or seven institutions to talk to and they should concentrate their efforts accordingly. ‘There aren’t many who are doing stock selection from here,’ he says, adding that companies should target their story to the active managers in the city. Aside from that, if you’re after Australian capital, talk to someone who knows where the institutions’ stockpickers are located offshore.
Roger Hunt, executive director at Gavin Anderson & Kortlang in Sydney, says the Sydney pilgrimage becomes more worthwhile if your company has some Australian operations or is looking at setting up a deal with a locally-based company. Such a profile opens up the number of fund managers and analysts who will be interested in the story. The trip can then be tied in with commercial meetings and press briefings. ‘It pays to meet with some of the key brokers as well,’ adds Hunt.
Recent Innovation
It’s no wonder that IR visits from foreign companies remain relatively scarce. Aside from the geographical gap, IR among Australian companies has only really taken off in the last few years.
Of course, some of the old hands have been practicing top quality investor relations for many years now – ANZ Banking Corp was mentioned many times by members of the financial community as well as consultants – but it remains an elite group of companies in a small market who have really got to grips with the function.
The scarcity of good investor relations consultants in a center the size of Sydney is a reflection of the market’s development. Sure, there’s a raft of financial PR players adept at dealing with the press, but only three consultancies were mentioned as being worthy of IR note by corporates. Orient Capital is viewed as knowing the local financial community fairly well; Technimetrics has the edge as data vendors rather than consultants; and Gavin Anderson is up there too, although its image tends to be more of a corporate and public affairs consultant than an IR outfit.
As ever, commentators believe the Australian IR outlook is improving. High profile corporate governance cases over the last few years – at Coles Myer, for example – have raised the IR stakes for Australian companies and made local institutions more active in seeking out information. Telstra’s privatization and next year’s planned demutualization of AMP have also contributed to the public’s increasing thirst for equity-related products.
Cultural Shift
Michael O’Reilly, manager of the retail business division at Commonwealth Financial Services, notes increasing success with equity-style products, although fixed-income remains at the top of the pile. ‘There’s a market out there dying to be taken,’ he says, adding that the growth of interest in equity is not yet being mirrored in international products. ‘I don’t think the submerging Asian markets have done offshore sales any favors. Domestic equities may do quite well but obviously we’re at the beck and call of the market. A bull market tends to lower the resistance of the more conservative retail customer.’ A bear market reverses the trend.
Stephen Dunne, head of Australia and New Zealand equities at AMP Investments, is more optimistic about the long-term trends for equity investment – both domestic and international.
It’s worth adding, though, that the interview with Dunne took place before market fears spread to London and New York. He believes the ‘enormous pot of money’ provided by compulsory superannuation schemes will drive the future development of Sydney’s fund management industry, attracting more foreign investment houses and driving some of the smaller players into the arms of the big institutions. Dunne notes that next year will see the introduction of member choice for superannuation funds, which he believes will also help push more money into equities.
‘Eight to ten years ago, institutions were more focused on guaranteed income funds. Today they’re becoming far more sophisticated,’ says Dunne. ‘That has driven a general creep up in exposure to growth assets and a general creep up in international equity exposure. On the whole, investors are becoming more comfortable with the trade-off between risk and return.’
Current Considerations
That’s all good news for foreign companies looking to access Sydney-based capital in the future, but what of the here and now? Don’t get the idea that it simply isn’t worthwhile dragging senior executives down to Sydney to talk to institutions. It is. There are just a couple of provisos before you board the plane.
First, as mentioned above, it helps if your company has local operations to help absorb the time and expense of an investor relations visit. Second, it helps if your company is in the right sector. Not surprisingly, Sydney-based institutional knowledge of the resource sector is much more advanced than in many other centers. Companies in the right business, which astutely target the right people in Sydney, can lever off that knowledge to substantial investor relations advantage.
Katarina Lybeck, senior vice president of corporate communications at Outokumpu in Finland, says her company has taken its story directly to Sydney-based investors several times in the last few years. ‘The interest is there because we are in metals and mining,’ she says. ‘There’s a tradition in Australia of following mining stocks, exploration news and so on, and many of our competitors are there.’
She adds that having Australian operations means Outokumpu’s executives regularly visit the country and they try and tie in investor meetings with other business trips. ‘In that sense, we’re not really building Australia into our regular grand tour of the world. But we do maintain active contact with the Sydney institutions and if our board members are in Australia for business we try to fit in a few institutional meetings.’
Meeting Places
Venue-picking for presentations is fairly simple. Choose any of the leading hotels within the central business district (roughly defined as lying in the rectangle formed by Circular Quay, George Street, Macquarie Street and Market Street/Queens Square) and you cannot go far wrong. Most of the institutions have their offices within this area and it is favored for presentations and lunches.
As Ian Matheson of Orient Capital notes: ‘The popularity of a venue is invariably a function of its location.’ Too true. If you want to stand a better chance of attracting the attendance of someone from BT Funds Management then book a presentation in the Wentworth Hotel which is across the road from the BT offices in the Chifley Tower. Likewise, for AMP choose one of the hotels nearer to the quay. Of course, you can walk between the Chifley Tower and the quay in around five minutes, but that’s not the point.
Small distances they may be relative to other centers, but as one consultant puts it, ‘The smaller the distances involved, the less inclined people become to go any extra distance.’ The Park Hyatt is a classic example. It’s one of Sydney’s truly premier hotels and no more than a hop, skip and a jump from the downtown skyscrapers. But it’s the wrong side of the tracks if you are trying to attract attendees from all but a few of the city’s institutions and is not generally favored as a presentation venue. Central locations for holding one-on-ones are rare; most institutions would expect you to go to their offices.
Business lunches and dinners remain a popular pastime in the city – Sydneysiders are big on food and the restaurant scene has blossomed in recent years. Still, some establishments really rule the roost.
Restaurant 41 is generally regarded as the most exclusive in Sydney. Rumor has it that Alan Bond had his eye on the site to build the tallest skyscraper in the world – topping it off with a private penthouse – back in those heady days of fraudulent excess in the 1980s.
If you want a window table in today’s penthouse equivalent, book at least a month in advance then sit back and enjoy some of the most stunning views and best food in Australia, satisfied in the knowledge that Alan won’t be joining you.
Top 10 Institutions by Total Equities Under Management
- AMP Investments Australia Ltd
- Axiom Funds Management Corporation
- BT Funds Management Ltd
- Commonwealth Financial Services Ltd
- Lend Lease Investment Management
- Macquarie Investment Management Ltd
- Permanent Trustee Company Ltd
- Prudential Portfolio Managers Ltd
- Schroder Investment Management (Australasia) Ltd
- Westpac Investment Management Ltd
Source: Technimetrics Inc
Tourist Information
Where to Stay
Park Hyatt
7 Hickson Road, The Rocks
Tel: +61 2 9241 1234
Fax: +61 2 9256 1995
Regent of Sydney
199 George Street
Tel: +61 2 9238 0000
Fax: +61 2 9251 2851
Ritz-Carlton Sydney
93 Macquarie Street
Tel: +61 2 9252 4600
Fax: +61 2 9252 4759
Sheraton on the Park
161 Elizabeth Street
Tel: +61 2 9286 6000
Fax: +61 2 9286 6686
Where to Present
Intercontinental
117 Macquarie Street
Tel: +61 2 9230 0200
Fax: +61 2 9240 1240
Regent of Sydney
Tel: +61 2 9238 0000
Fax: +61 2 9251 2851
Sheraton on the Park
Tel: +61 2 9286 6000
Fax: +61 2 9286 6686
Wentworth
61-101 Phillip Street
Tel: +61 2 9230 0700
Fax: +61 2 9227 9133
Where to Eat
Restaurant 41
2 Chifley Square, Chifley Tower
Tel: +61 2 9221 2500
Fax: +61 2 9221 5243
Asian, French, Australian
Belmondo
12-24 Argyle Street The Rocks
Tel: +61 2 9241 3700
Fax: +61 2 9241 3744
Modern Italian
Rockpool
107 George Street The Rocks
Tel: +61 2 9252 1888
Fax: +61 2 9252 2421
Seafood
Where to Go The Harbor
Opera House and bridge to boot.
The Rocks
Oldest part of Sydney. West of Circular Quay
Royal Botanic Gardens
74 acres of gardens. Mrs Macquarie’s Road
