Despite being a growing reservoir of funds under management, this critically important pool of capital is confronting mounting problems collating and disseminating key data in a timely manner.
The ratings house is pinning its growth strategy on a revamped methodology that increases the emphasis on governance to 25 per cent – a timely move considering APRA’s proposed reforms.
Euromoney buys CIE in second tilt at Australian conference market
Euromoney, the UK-listed conference and media company, has paid AUD$14.4 million for 75 per cent of Australia’s largest institutional investment conference company, Centre for Investor Education, with the two principals signing up for a three-year minimum earnout.
The co-owners, Jamie Nemtsas and Erling Sorensen, appear to have made a handsome profit on the company they are rumoured to have paid about $5-6 million for in only October 2010.
They will receive a similar, or higher, pro-rata amount in 2015 for the remaining 25 per cent, assuming certain hurdles are met. They are still negotiating management contracts for the three-year period.
The deal allows for some consolidation in the crowded conference market in the region as well as providing additional benefits for clients due to Euromoney’s size and global reach. Nemtsas said the main benefits were to provide better access to global and sophisticated content for attendees and also better contacts among the world’s major pension funds and asset management firms.
Both fund managers and pension fund trustees and executives will be pleased with consolidation among the conference companies. They are continually being harangued to sponsor or attend an increasing array of conferences in the Asia Pacific region as elsewhere.
In a further move to consolidate the market, the smaller Australian conference and media company, Conexus Financial*, has also linked up with an international conference producer, buying an unspecified interest in the US World Pension Forum. That company, which started in 1992, runs three US conferences and one international one.
CIE currently produces about 14 conferences a year, mostly in Australia, and runs a trustee education business. It has about 18 staff in its Melbourne office.
The company was founded by Melda Donnelly, a highly respected company director and executive, as well as fund trustee. She is a former chief executive of QIC and non-executive director of VFMC, among many roles in her career. Melda sold to Nemtsas and Sorensen after a lengthy sales process. One reason the process took at least three years, from the time she made her decision to sell to reaching a firm agreement, was that most prospective buyers were nervous about operating successfully without her at the helm.
But CIE this month completed what is generally regarded as the most successful conference for Australian super funds in several years – the annual international investing conference for trustees, CEOs and CIOs, held in Tokyo. The conference was well supported by sponsors, had top-level attendees and quality content.
Unlike most conference companies, CIE still manages to charge registration fees for fiduciary delegates.
For Euromoney, there will now be an opportunity to fold into CIE management its small Australian annual conferences run by subsidiary titles Institutional Investor and Global Investor. Institutional Investor, in particular, has struggled since losing its main producer, Teik Heng Tan, and business manager, Chris Rath, to Conexus in 2010. They have both subsequently left that firm. Tan has started up in opposition and Rath left the industry after an acrimonious departure at Conexus.
Tan formed Investment Innovation Institute (i3) early last year. It has two Australian conferences for fund CIOs, an Australian investment conference for insurance companies, and a big regional CIO conference in Beijing. He produced the Institutional Investment conferences in Asia Pacific between 2007-2011.
Nemtsas said that CIE would be running the Institutional Investor program, currently being run out of New York, as well as other Euromoney events in Australia. It would probably widen CIE’s current range of interests to include risk officers and chief financial officers and also expand into wealth management beyond what is currently proposed.
“We’re progressing the professionalism of our business alongside that of the funds,” he said. “Euromoney has a lot of research capabilities… We have six analysts now, whereas the firm had only one when we bought it.”
Euromoney would also, likely, expand its “membership” concept for event sponsors. What this involves is the conference producer signing up major service providers to a range of events in an annual program which may cost several hundred thousand dollars but has a defined limit on the number of participants. The benefit to the conference producer is that it involves only one annual sale across multiple events and the sale normally by-passes the testy marketing departments which co-ordinate budgets. The advantage to the service provider is that the sponsorship decisions are consolidated and buying power is normally enhanced.
Euromoney, too, will hope that the CIE purchase goes a lot more smoothly than the previous Australian conference company it purchased, AIC Conferences, in the early 1990s. AIC had a colourful past. It started as a newsstand magazine, ‘Australian Investment’, which was half-owned by entrepreneur Russell Goward, who ended up doing time at a prison farm for fraud not long after the 1987 share market crash. The magazine struggled along for a while and then re-emerged as a conference company under the sole ownership of one of its minority shareholders, Tony Steel.
Steel sold it to Euromoney after expanding its base and number of events in Asia and Europe but after some differences with the London company, bought it back in the late 1990s.
*The author admits to being seriously conflicted for this report. He produces the IO&C Conference in Shanghai, is the founding chairman of Conexus Financial and sold his interests in April 2010, and is a friend and former colleague of Teik Heng Tan.
