 NEW YORK (AP) - The days when investment banks would spend time wooing big investors over a leisurely meal, with booze and cigars afterward, may be on their way out.
Now, firms such as Germany's Dresdner Kleinwort can play matchmaker through "speed investing" sessions. It may not be as genteel, but it gives European companies like Lloyds TSB and retailer Burberry a chance to woo deep-pocketed American investors.
Wall Street's twist on speed dating allots companies about 20 minutes to sell themselves before mutual funds and other institutional investors. A buzzer rings, time is up, and they all switch tables.
This unconventional form of dealmaking offers a new way portfolio managers might find the next stock for your 401(k).
"This is a clever way of meeting people," said Henry De Vismes, a former Citigroup Inc. executive that now runs his own wealth management shop based in New York. "I try to meet about four companies a week, but here I can see 20 in a day. You have to do your homework because it can be quite intense."
Typically, a company embarks on a formal road show to meet hundreds of investors at once — limiting the amount of time for any face-to-face meetings. Top corporate executives rarely meet with smaller wealth managers. Instead, they clear the decks for big-name outfits like Merrill Lynch & Co. or Fidelity Investments.
The speed investing events gives would-be investors the basics about a company, often from the head of investor relations. If there's a match, both sides arrange a longer meeting before investing any money.
Like investors that attend, companies say the approach helps them reach out to money managers not normally on their radar. A recent speed investing event, held in a Midtown hotel in New York City, featured companies like Swiss drug maker Novartis AG, food and drinks company Diageo PLC, and pay-TV operator British Sky Broadcasting PLC.
"You have no idea how whites of the eyes contact is important," said Michael Oliver, director of investor relations for London-based retail bank Lloyds. "This is an add-on to what we do, and won't replace road shows we go on. But, so far it's been a great success."
That's exactly what Dresdner's Nick Seaward wants to hear. He came up with the idea a few years ago to cut back the amount it time it takes to court new shareholders — and help introduce companies to a bigger swath of the investment community.
Speed investing began in 2006 in London, and has now spread to North America with events held in New York, Boston and Toronto this past week. There are also plans to expand them elsewhere in Europe, with Milan and Madrid planned for later this year.
Seaward said participants — who have grown weary of a traditional, yet more long-winded, approach to dealmaking — appreciate the informality of speed investing.
"I've sat through enough of those meetings in my career, and know perfectly well that the gist of the discussion is going to take place for about 20 minutes of an hour meeting," said Seaward, who is managing director of Dresdner Kleinwort's corporate access team.
"Both sides know it, and go through this charade yet know very well the business of the day can be done in a shorter period of time," he said. "This just dispenses with the formalities and gets on with the business."
So far, the success rate shows that about 25 percent of the companies later arrange for longer meetings. Those are good odds in the world of high finance — and even staggering for some of the smaller European companies that might have never caught the eye of an American investor.
Marcus Jentsch, head of investor relations for German power supplier MVV Energie AG, said his company already has some international investors but is looking for more. He said the time is right as more American portfolio managers are looking overseas to fill out their portfolios.
"Business is becoming more international," he said. "So it is a natural trend that the asset managers in America are looking more and more overseas for new ideas." |