Liz Hoffman and Geoffrey Rogow write about direct contact between the largest investors and their portfolio companies in the Wall Street Journal. While it applies to the functions related to research and deals usually undertaken by financial intermediaries, it is likely to have an impact on governance and ESG-related engagement as well.
Wall Street’s role as matchmaker between big money managers and corporate executives is under threat.
Next year, five large investing firms overseeing more than $7 trillion are banding together to directly organize a series of meetings with company executives, according to people familiar with the matter. The first meeting, set for Boston next spring, will host executives of consumer-staples companies.
The existence of the meetings is a direct threat to the hundreds of millions of dollars in fees banks make each year introducing their investor clients to the managers in whose companies they own stock. Fund managers pack into hotel ballrooms to hear presentations and take guided tours of company factories. A one-on-one meeting with a chief executive can run $50,000 or more in some cases.
Now, some of the biggest managers are planning to go it alone. No banks needed, or even invited.
Fidelity Investments, Capital Group, Wellington Management, T. Rowe Price Group Inc. and Norway’s government fund are planning a series of private conferences where their analysts can meet CEOs, according to people familiar with the matter. The agenda: cocktails and dinner, followed by a full day of one-on-one meetings, 75 minutes each. CEOs only.
“We plan to partner on corporate access events and conferences that will provide a tailored research experience for our investors,” a spokeswoman for T. Rowe said.
The workaround is just the latest way that banks are losing their spots as Wall Street’s indispensable middlemen