‘No one wants to go back’: Covid scuttles IPO and debt roadshows


VTex was valued at $3.5bn in a public listing last month after its executives and bankers wooed investors in more than 50 meetings. Instead of logging thousands of air miles and checking in to glitzy hotels, the Brazilian tech group’s marketing blitz relied on a less flashy solution: video conferencing.

Roadshows, once a hallmark of debt and equity raising known for large lunches and a frenetic pace of meetings, set over multiple days and spanning cities across the world, have been halted by the pandemic.

Debt and equity bankers at big financial companies say that after coronavirus struck, their days of globetrotting in their quest to raise capital came to an abrupt end. Far from mourning physical roadshows’ demise, however, bankers, investors and even some company executives appear to be warming to the new way of doing things.

It is generally quicker and cheaper to get deals done online and over video calls. And it has meant corporate executives have spent less time stuck on planes and in traffic jams and more time spent with potential investors, as was the case for VTex.

“It is something they would never have been able to do before,” said Lise Buyer, who founded Class V Group almost 15 years ago to advise companies looking to go public, after spending two decades as an investor, banker and corporate executive working on IPOs. “To their credit, they did more meetings than any firm I have ever worked with.” 

Buyer was part of the team that took Google public in 2004, when Sergey Brin and Larry Page rushed to buy suits to wear the night before the launch. She was also once dashing through New York in the 1990s with Scott Cook, co-founder of financial software maker Intuit, and running slightly late for a meeting despite skipping lunch.

“We lost him in Midtown Manhattan because he ran down the street to get a hot dog from a pushcart,” she said. But there is a serious point: “It’s all part of the time, expense and massive inefficiency of trying to visit people in multiple cities in a few days.”

The typical IPO roadshow began early on a Monday morning. A company’s senior management would probably have flown to New York, gathering its bank’s sales staff at the office of the firm arranging the fundraising to walk through the pitch to investors. They would then go out and begin contacting investors.

The following morning would begin with a breakfast, followed by three one-on-one meetings with big asset managers, then a lunch, more one-on-one meetings and then a dinner. Meetings would probably be held at the investor’s offices, then banks would put on big lunches at upmarket hotels. Two years ago, Uber chose New York’s Mandarin Oriental to host its IPO lunch, while rival Lyft picked the St Regis.

New York would be followed by Boston, then out to the west coast. There might be stops in Denver to see Janus Capital or Kansas to see American Century. 

“Do you go there or do you spend another day in New York?” said David Getzler, head of US equity capital markets at Société Générale. “These are the questions you think about.”

Google co-founders Larry Page (centre) and Sergey Brin rushed to buy suits during the tech group’s 2004 IPO roadshow © NASDAQ via Getty

International roadshows might have started the Friday before in London. But each, to some extent, had to be tailored to the schedules and aims of the company going public. As a result, the planning, even on a smaller domestic roadshow, often ended up being done by specialist event management groups. 

“You travel with the management team side by side,” said Chris Israelski at Imagination, a self-described experience design agency that has worked on more than 800 IPOs. “A logistics manager and production manager then travels ahead of the team to make sure there are no problems with hotels, or cars, things like that.”

Then when Facebook went public in 2012, a shift occurred, Israelski said. “It was the first time where there was a properly produced online roadshow, supplementing what was done physically.”

Since then, many companies have invested in online presentations, but the large-scale production value for the likes of China’s Tencent Music Entertainment’s public debut in 2018 — with in-person executive presentations in four cities around the globe — did not fully pause until March 2020. 

“It has hugely shifted. It was shifting prior to the pandemic but it has accelerated,” said Israelski. Her role has pivoted from global logistics to managing online production of videos and testimonials, bringing in an array of staff and customers of companies that would historically have never been part of a roadshow. “Sometimes it is a one day shoot, but it can be 18 days of shooting,” she said. 

Column chart of $bn showing Bank fees from debt and equity fundraising reach new heights

For the banks, the virtual roadshows mean big cost savings, with companies bearing more of the cost of online production. “It was expensive,” said Pierre Lapomme, head of US equity capital markets at BNP Paribas in New York, referring to in-person events.

Even a no-frills roadshow could easily run into the hundreds of thousands of dollars, according to bankers, paid for by the group of banks involved. “A single global jet bill could be close to a million [dollars],” said Israelski, hinting at the cost of more elaborate marketing efforts. 

The increased use of virtual roadshows has also reduced the amount of time it takes to get both equity and debt raisings over the line. This year it has taken an average of 11.8 days from the announcement of a loan deal financing a leveraged buyout to the debt being allocated to investors, according to data from S&P Global Market Intelligence. It is the shortest period on record for data going back to 2010, when the average was closer to 21 days. 

For high-profile debt financings, like many private equity-backed buyouts, senior management would once tour big cities for up to 10 days before returning to their office to seal a deal. In 2016, when Argentina was pitching its debut in debt markets after it had defaulted more than a decade earlier, it sent two teams of policymakers to five cities over the course of five days.

Some investors lamented at the time that the delegation sent to Boston and London represented the “B-team”, given that the finance minister at the time, Luis Caputo, had travelled to New York, Los Angeles and Washington as part of the main delegation, according to interviews and roadshow communications seen by the Financial Times.

Former Tencent Music Entertainment chair Tong Tao Sang observes trading activity in the group’s shares on their New York Stock Exchange debut. © Mark Lennihan/AP

The shorter turnround has helped fit more deals in, with records set in 2020 for both debt and equity issuance. Capital markets bankers are on course to notch records again this year.

The swifter pace also helps to limit the potential for volatile markets to derail a fundraising effort. “You have more visibility about when you will be done so you have less risk to the market,” said Lapomme. 

But for all the efficiency, there is still a desire to rekindle some in-person meetings. “It’s still not perfect,” said Lapomme. “What you are missing in a digital roadshow is the body language.”

Debt bankers and investors pointed to lending money to particularly challenged companies, where you want to know the management team personally if you are going to hand them large amounts of cash. 

Column chart of $bn showing Equity fundraising soars to record despite lockdowns halting roadshows

In equity markets, an emotional element needs to be considered, as well. Separate from the roadshow, the fanfare of ringing the opening bell at the New York Stock Exchange, celebrating a milestone with colleagues and supporters, is likely to remain.

Israelski said some executives were planning to return to in-person roadshows, but many industry participants expected them to be smaller and more targeted towards augmenting the digital media output. “There will always be people who think they are more compelling in person and that think their company or their product is better presented in person,” she said.

For investors, more gossip and soft details can also be gleaned from in-person events, including just how many big-name investors turned up to listen to the pitch. But is it worth the time — and expense — to return to exactly the way things were? 

“I don’t think we’ll go back,” said Getzler. “No one wants to go back. We have all embraced a new system.”