Communications shake-up

Investor relations and communications took on increased importance for every part of the financial industry last year, as firms realised that they needed to be clear about what they were doing and why it was good for the economy, or risk being cast as villains by the press and governments around the world.

While most private equity firms have focused on building up their IR bench and reaching out to LPs more frequently, The Riverside Company is helping one of its portfolio companies, King Worldwide, take advantage of this sudden increase in demand for financial communications services by aggressively accumulating market share.

Since its formation in 2007, King Worldwide has built a diversified financial communications platform with four major service areas: financial communications/public relations, data/analytics, investor relations, and proxy solicitation. Two of the company's subsidiaries, Broadgate Consultants and Taylor Rafferty, frequently work with private equity firms and their portfolio companies.

Amid current conditions, King Worldwide is looking to strengthen its existing businesses as well as take advantage of more “realistic seller expectations” to make new acquisitions. The opportunity is great, said CEO Oliver Niedermaier.

“It's really a completely under-consolidated industry,” Niedermaier said. “It's fragmented and localised, and nobody has really tried to consolidate it with the angle that we have brought to it.”

A number of the issues that have plagued private equity firms in recent years – the implementation of FAS 157, increasing regulatory scrutiny and LPs demanding more detailed and frequent reporting – have been a boon for King Worldwide. So too have the increasing globalisation of securities ownership and growth in cross-border M&A. Even the raft of company bankruptcies in 2009 wasn't a completely bad thing, bringing business to King Worldwide's bankruptcy administration arm.

The fact that gold-plated IR and reporting is starting to become the standard in other parts of the world also presents an opportunity that King will seek to take advantage of. In the next phase of King Worldwide's growth, the company will focus on expanding into new geographies, Niedermaier said.

“Asia is an underdeveloped market for us right now,” he said. “Just a couple percent of our revenues come from Asia, and we're not present there for all of our business lines.”

Organic growth won't be fast enough, so look to see King Worldwide making acquisitions in the region in the future. Other regions that are interesting to the company include the BRIC countries and the Middle East, he said.

King Worldwide is looking to accumulate 20-25 percent market share in the financial communications industry, which would equate to something like $500 million in revenues.