Hi, how are you? Fine. How’s the weather in Budapest? Fine. How’s the jet lag? Fine, thanks. OK then, goodbye.’ Szabolcs Czenthe, head of IR at Mat?v, Hungary’s NYSE-listed telecom giant, chuckles before adding: ‘That’s what investor meetings in the US will be like if they get any shorter.’
And he should know. After two years at the helm of Mat?v’s IR department – during which the company won IR magazine’s 2003 grand prix for best overall investor relations by a large-cap company in Central & Eastern Europe – Czenthe has a wealth of experience touring global capital markets.
‘About five years ago, meetings with US investors lasted around 90 minutes,’ he says, lamenting the increased pressure on US fund managers to cover enormous numbers of companies (sometimes as many as 50). ‘Now meetings last around 30 minutes – can you imagine a 30-minute investor meeting? We have a 15-page presentation and it takes five minutes just to finish shaking hands!’
This means less time devoted to detail, covering just the basic questions – possible acquisitions, dividend policy and a bit about strategy – which, notes Czenthe, is not an ideal situation. ‘It makes no difference to us,’ he explains, ‘but I don’t think it’s very efficient – it doesn’t really serve the investors’ interests, although American fund managers are extremely good at identifying the key points in very little time.’
Getting organized
With a hectic schedule of eleven one-on-one meetings a day, investment tours are always going to be a highly stretched program for Mat?v. Czenthe used to rely on one well-known IR consultancy to organize its roadshows, but now finds them time-consuming and expensive compared with the roadshows organized by large investment banks.
‘There’s one advantage [to using an IR consultancy]: you’re absolutely independent,’ says Czenthe. ‘But roadshows always take three or four times as long if you use an independent consultancy. And I know because I’ve used both [consultancies and investment banks].’
Czenthe claims banks have a better understanding of investors and are better at preparing the meetings. It’s important, however, not to rely on just one. ‘We never go on roadshows with just one bank,’ he explains. ‘We rotate them – we’ll do UBS, then Merrill Lynch, then Credit Suisse First Boston. This is very effective, because they know the investors and they know the logistics.’
Get smart
However, Mat?v does rely on an IR consultancy twice a year for its shareholder ID. According to Czenthe, public shareholder registries across the world are mostly uninformative and out of date, often by up to six months, and the only way to get useful ownership information is to commission reports.
‘We want to visit all existing shareholders,’ he explains. ‘If there are potential investors who are shareholders in our competitors or in our sector but not in Mat?v, we want to know why they didn’t buy us. When a shareholder sells our shares, we don’t go and ask, Why did you sell? But we find out if there’s something we can learn.’
Mat?v has learned over the years that transparency is key to investor confidence, which is where its NYSE listing comes in particularly handy. ‘We’re prepared according to SEC and NYSE legislation,’ says Czenthe. ‘Analysts really like that because all the details are there. Many fund managers consider that if you are NYSE-listed, they don’t have to worry as much about transparency, predictability and depth of information.’
But Mat?v’s biggest IR challenge lies in the near future. This May ten Central and Eastern European companies become part of the European Union, although their adoption of the euro won’t come until much later. While Mat?v is currently a big fish in the small pond of emerging-market companies, based on the experience of Greek and Portuguese companies (also EU latecomers), sell-side coverage will likely decrease once Hungary becomes part of the EU.
‘We’re going to be part of a bigger basket,’ admits Czenthe. ‘Today we have to compete with other emerging-market companies, but the time will come when we will have to compete with the big European players – and competition for the fund managers is going to get a lot tougher.’
