Two Swiss equity analysts are partnering with a long-time investor relations advisor on a new venture that seeks to muscle in on how brokers arrange meetings between corporate executives and potential investors, finews.ch has learned.
It is a special kind of «pay for play» scheme: investors typically pay for access to senior executives at companies they are looking to invest in with dealing commissions and fees.
Road shows and other brokerage events are lucrative sources of revenue for the sell-side, which typically gets paid in commissions and fees when clients decide to trade off of meetings with management.
Broker as Gatekeeper
This puts brokers in a unique – and lucrative – role as a gatekeeper, and ensures that large powerful investors which can generate high trading volume get plum access to blue-chip firms.
This is slowly changing under new pan-european rules and with the advent of new, digital players.
Among them are Kilian Maier and Yasemin Diethelm-Ersan, formerly brokerage analysts with Mainfirst and Zuercher Kantonalbank, respectively, are teaming up with Thomas Schneckenburger to form Interaction Partners.
Broker-Like Platforms
Schneckenburger is a long-time investor relations specialist and partner with Hirzel.Neef.Schmid who previously worked as a brokerage analyst for UBS and Deutsche Bank.
Interaction matches corporates with investors with road shows and other investor events, organizes meetings, collates and analyses investor feedback, and tracks investor relations activities.
They have hired former Helvea and Mainfirst equity salesman Marc Effgen as an advisor in Geneva, effective in November.
Breaking the Broker Monopoly
Platforms like WeConvene, which partners with Bloomberg, and ingage already exist abroad, but Interaction would be the first of its kind in Switzerland.
«We think there will be a disruption of the traditional broker model for corporate access due not just to MiFID II but also to digitization and newer fintech players,» Maier told finews.ch.
The firm envisions breaking the hold that sell-side brokers currently have on corporate access in Switzerland by improving and digitalizing the process, and maximizing the benefit for the corporate, who will have to pay for this service.
Will Corporates Pay For Access?
Brokers can typically shut out smaller investors such as family offices, private banks, external asset managers and pension funds, who can’t generate as much trading volume as major mutual funds.
«It requires a shift in mindset – that companies pay for this service,» Maier said.
The role is coming under increasing regulatory scrutiny under new paneuropean MiFID rules, which are being adopted in Switzerland as FIDLEG and FINIG laws.
