BNY Mellon Survey: Companies Target Sovereign Wealth Fund, Emerging Market Investors

(October 25, 2011) — Companies are focusing more on sovereign wealth funds and emerging market investors, a new survey by BNY Mellon Investor Relations reveals.

What do sovereign wealth fund and emerging market investors have to offer?

“There is a scarcity of capital in the market today, and companies are being more creative with respect to how they’re targeting new investors,” Guy Gresham, New York head of the Global Investor Relations Advisory team at BNY Mellon, told aiCIO in a telephone interview. “Another global trend is that investor relation teams are becoming more global in their approach, so naturally sovereign wealth fund and emerging market investors factor into a global approach,” adding that due to their longer-term investing horizon, sovereign wealth funds have been a helpful source for companies to raise capital, while also serving as a source of stability during market fluctuations.

“Our clients have targeted emerging market investors because they’re supportive of strategic objectives to generate revenue and build operations in emerging markets,,” Gresham said, noting that local investors based in such markets serve to support brand awareness.

According to BNY Mellon’s latest research, 59% of surveyed firms meet with SWFs. The study noted that by a wide margin, the most frequently engaged wealth funds are based in Singapore, Norway and Abu Dhabi. Western European companies are the most likely to meet (69%) or consider meeting (24%) with SWFs, while North American firms are least likely to engage sovereign wealth funds (42%).

Meanwhile, 40% strategically target investors in emerging markets, up from 36% last year.

Additionally, the survey found that a total of 74% of all firms believe greater regulatory oversight is needed for trading mechanisms such as ‘dark pools,’ short-selling, and high-frequency trading. The sentiment is strongest among US companies (89%) versus non-U.S. firms (70%).

“With continued uncertainty in the global markets, it remains critically important for companies to maintain a robust investor relations program and understand how best to focus their efforts,” said Gresham in a statement.

Michael Cole-Fontayn, CEO of BNY Mellon’s Depositary Receipts business, added in the release by the firm: “Companies are adapting to new global market realities and taking a strategic approach to sovereign wealth, as well as growing investor pools from China to India to Brazil, as they seek to better position their firms in higher-growth regions of the world…We see this trend only strengthening and are developing new products that offer greater visibility and access to the global capital markets for forward-thinking firms.”

The survey was conducted through July and August 2011 and featured input from 650 companies across 53 countries, with respondents covering financials, industrials, consumer, technology and healthcare, among other market cap and sectors.