Forward Thinking Investor Relations
October 2018
In this issue:

i-advize Corporate Communications, Inc. announced  last month that Mr. Sean Glickenhaus joined the company as Senior Vice President. Mr. Glickenhaus works with a variety of clients throughout the region.
Sean has been analyzing Latin American issuers since 2003. Prior to joining i-advize, Sean was the Head of Corporate Debt Research at UBS. He was also previously a LatAm corporate credit analyst and equity analyst at HSBC, and a LatAm and US equity analyst at Citigroup. Sean holds an MBA and Masters of International Affairs from Columbia University, and speaks native Spanish and English, conversational Portuguese and fluent French. He is also a PADI Dive Master.

"Sean complements our range of expertise really well and we are excited to welcome him to our team. His extensive experience within the region and particularly the fixed income segment is a value-added addition to our group of experts." stated Melanie Carpenter, Managing Director and Founder.

From the Sell-Side to the IR Side: Interview with Sean Glickenhaus

As a past equity and debt research analyst and now Senior  VP of investor relations at i-advize, Sean has been on both sides of the investment table. We caught up with  Sean to talk about challenges, trends, and the one piece of advice he would give to LatAm IR teams.

1. What attracted you to Investor Relations?

The reason I went to business school and then into management consulting almost two decades ago was to help companies from Latin America access the US, and to help foreign companies better understand opportunities in Latin America. Then after 15 years in financial services, working now with i-advize as a conduit between companies and investors helps me achieve my long-term goals.
2.  How is your experience as sell-side analyst helping you in your new role as IR advisor?

As an equity and also corporate debt analyst on the sell-side, I was already bridging the gap between investors and issuers, and offering advice to both sides as well. In my prior role, I was also organizing conferences, both in-person and virtual, and taking investors to see the companies in Latin America. I plan to now continue these activities and more.

3. How do you see MIFID II affecting the sell-side?
MIFID II has weighed on broker research revenues, and consequently, the bulge bracket firms have been forced to reduce their budgets including their human capital (e.g. research analysts). Consequently, they are now content to either reduce coverage, and/or have junior analysts with less experience and less global knowledge cover companies. This is especially true for emerging markets corporate coverage, and LatAm is no exception. Unfortunately, investors require value added thematic research rather than just routine earnings results coverage. 
4. How do you see MIFID II affecting LatAm issuers?
Given the changes we are already seeing on the sell-side, which will likely only worsen, the buy-side is being forced to look at alternatives including increasing their own ranks. This of course means that issuers will no longer be able to depend as much on getting their message out to investors through a handful of sell-side analysts, and will now have to contend with a larger number of individuals.

5. Now that you're on the other side of the table, what would be some of your top recommendations for the issuers and our clients in LatAm?

I believe investor relations teams should become more pro-active than ever in reaching out to investors as they compete for capital. For those that already "pound the pavement" so to speak, through investor days and non-deal roadshows, that is a good step. However, IR teams now need to spend even more time with investors on the phone or on video conferences. At my last firm, given the budget constraints some EM investors had at the time, we organized a virtual conference for Brazilian issuers, which was much appreciated by the investors. If a client wants to travel to see investors, that of course is optimal and we can help with that given the shrinking sell-side coverage. However, I would suggest that our clients who are unable to travel as much to places like Europe, reach out to us to organize a virtual conference for them. I am confident that our team can come up with strategic alternatives that may be "outside the box" but are still effective.  

6.  In terms of corporate governance, what is the main challenge for LatAm companies today?

One important hurdle is transparency and the constant balance between being forthcoming with value-added information, while avoiding selective disclosure and perhaps giving away sensitive data to competitors. Investors are used to a higher level of disclosure from publicly-listed companies ---- from the developed markets to the emerging markets. This is especially true for LatAm issuers, even for some of the government-controlled entities.
Investors looking at EM investments are very focused on transparency and corporate governance (including family involvement in the companies) in addition to the financials. Given that issuers are competing with a myriad of investment opportunities across many countries, sectors and even asset classes, providing better information has become of paramount importance to access capital at reasonable terms.
On the sell-side, decreasing budgets and time constraints have caused analysts to be generally less interested in covering companies that are "difficult" to cover. These include companies that lack overall transparency, or that are not in line with their peers in terms of corporate governance. In order to be more competitive, companies must provide more data, and even post excel spreadsheets with key drivers and financials. These are important factor in facilitating the job for sell-siders to cover the company, thereby increasing overall coverage.

7. What are the most significant changes LatAm companies can make right now to make them more competitive in the capital markets?  

Companies and their investor relations teams tend to focus on current shareholders and bondholders, and also are generally reactive to investor queries. Companies need to focus on being proactive. That is, focusing more time and effort attracting new investors and not just legacy holders in order to increase the potential demand on their securities. This also helps serve as a backstop when existing holders decide to decrease their positions or cash out altogether.

While the need to work with the sell-side is important to help disseminate information to a broader audience, it is dangerous to rely completely on the sell-side. Experienced IR teams pro-actively reach out to sell-side and buy-side analysts directly on the phone following earnings or other material news, rather than waiting for incoming requests for information. Experienced IR teams will also pre-emptively answer questions on websites and assuage concerns on pertinent matters before markets react.