IFR JOURNALISTS AND editors spend November each year trailing around the world’s financial capitals giving even the longest shot a chance to pitch and tell us why they deserve recognition. It is a chance to sit and spend a few hours with heads of businesses and chew the fat over the highs and lows of the year – while they also take a few swipes at the assumed opposition.
The IFR pitch is often the only time of the year that the heads of different regions and asset classes, along with the rainmakers, actually sit in the same room.
It is also the time of the year when journalists have the best chance of getting a straight answer to a tough question.
Bankers pitch to clients every day so it is remarkable how difficult some find it when the person on the other side of the table understands the market. Perhaps a little learning really is a powerful thing.
A special mention must go this year to our Bonds editor who spent over 72 hours sat listening to gems such as “we didn’t make a lot of money, but that’s not the point”.
THE REVIEW OF 2011 was always going to be a painful process as macroeconomic ills impacted activity across asset classes and regions. Every bank had its fair share of cancellations and deals that performed poorly, which most still acknowledged with some contrition.
Yet some US houses struggled to deal with either C-word: cancellation or contrition.
The suggestion that one deal– which left the lead with a residual position and a company with a far lower market capitalisation – was in any way a failure was met with astonishment at our interpretation of events. A banker involved said his firm’s role was “heroic” … before pointing the finger at a similar (but profitable) trade by a key competitor.
HOWEVER IT WAS another US firm that won the award for trumping the Denial of Peter. League table manipulation is nothing new and the sport of working out quite how the tables contained in a pitch book were arrived at is one regularly enjoyed by IFR journalists. It is however rare to see a bank move from the top to the bottom of a table (in this case one tracking failed IPOs).
As IFR asked the relevant bankers to explain it was clear this was more than the usual sleight of hand – this was complete denial. Deals that clearly failed had, we were told, “every chance of getting done” or were “90% done” – the other 10%, presumably being actually completing the listing in question. And this was despite the joint bookrunners of the same deal admitting in earlier pitches that the deal was dead.
It brought to mind the famous announcement from the US Department of Defense that a new missile had passed testing with flying colours. The fact that it didn’t get anywhere near hitting the target was simply a detail.
“Success breeds success,” we were told. The urge to ask ’How would you know?’ was hard to resist.
It got worse.
We were told that an IPO wasn’t an IPO at all. “It’s already listed,” said the regional head of ECM, ignoring the absence of any previous public offering to accompany the technical listing, making the deal the initial public offering – as confirmed by every regulatory announcement from the issuer.
Now IFR has trained many a cub reporter on the equities desk to understand the nuances and attractions of the most complex equity-linked products, but an IPO is normally one of the easier concepts to grasp.
Explaining that IPO stands for initial public offering to a senior managing director is a risky business and while tempted to apply to the global head of ECM there and then for the presumably now vacant head of EMEA post, fear of a flying cricket bat led us to keep quiet. Throughout the head of syndicate kept schtum.
“Well, we must have just imagined all those cancelled deals then,” one journo muttered, before quickly moving on.
The bank later expressed disappointment at not winning.
SOME BANKERS DO understand reality, with one displaying a rare awareness that his creditable candidate for deal of the year was unlikely to win. So having read just the title sheet, the pitch book was cast aside before a brief pitch for a competitor’s deal. A rare and cherished moment.
A FEW TIPS ahead of this year’s pitches. If you insist on holding a pitch in Hong Kong – even when we have offered the choice of meeting in Singapore – please come. Walking into an empty room and being greeted by smiling faces on a TV saying “Hello from Singapore” is not a good start.
Also when you are appearing in a virtual conference room remember it is virtually like you are in a conference room – so yes we can hear you whisper, see you doodling and rolling your eyes when your colleague starts to get poetic.
TWO MOMENTS PROVIDED some much needed light-relief. The first was a group of middle-aged men with waist measurements they would care to forget (IFR very much included) discussing the merits of US-firm Zeltiq Aesthetics – a firm specialising in the eradication of love handles.
The IPO was a success at a time when the US market had shut down but the indelicate question was whether the members of the team we were looking at were “before or after” they’d taken advantage of the free credits. A closer look at the team in front of us suggested they must have pooled their free credits to make one of their number whippet-thin.
THE SECOND WAS a tale of extraordinary commitment that tested the boundaries of human endurance. One well-fed originator landed at Heathrow after a trip around Europe pitching, only to turn on his Blackberry and see he would be getting straight on a flight to Russia. Rushing around the terminal he managed to pick up fresh underwear, shirt and socks.
Only the next day, the morning of the pitch, did he find out that Thomas Pink has a different understanding of XXL to other stores. Sitting down effectively cut off the circulation to vital organs, yet he battled through and risked future parenthood for the sake of the client. Whether the gamble was worth it is a moot point as no Russian deal has since emerged from the relevant asset class.
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