Tell us about the Arena Fund established in 2021 in Singapore and its structure as a Public Equity Fund?
The Fund is led by a team of CEOs and business leaders in the MICE industry. This is a unique, first-of-its-kind thematic investment opportunity for MICE and MICE-related stocks listed on established global exchanges, giving investors exposure to the growing MICE industry and adding diversification to their portfolios.
How important is the fact that the Arena Fund is MAS-regulated?
MAS is a highly regarded regulator and supervisor of financial institutions in Singapore. MAS establishes rules and formulates guidelines to encourage best practices amongst financial institutions. This ensures that the Fund Manager has the relevant experience and expertise to provide investment management services and advice while safeguarding investors’ interests.
What are the key propositions of Arena? How innovative is your vision within the MICE industry and the identification of growth opportunities?
Arena is the first fund dedicated to the MICE industry, led by a team of industry veterans. Apart from the traditional sectors of B2B trade shows and exhibitions, the fund will give global investors diversified exposure to emerging trends that will transform the industry such as digitalisation, virtual networks and content and data aggregation. The MICE industry is a large untapped market that has existed for a century with no dedicated fund or ETF.
MICE business travel and tourism was already a booming industry pre-COVID and now the future is reshaping, where players are offering content-driven networking and matchmaking opportunities through digitalisation and extensive personalised data analytics in the age of a surfeit of information. The industry has also flourished over the years to include an all-encompassing value-chain network of players such as logistics, accommodation, etc, engendering an eco-system that would be supportive of this transformation.
With the skies reopening after two years of pandemic-induced “hiatus”, the MICE industry is now ready to take flight and cater to the pent-up demand for face-to-face interactions. Lastly, the MICE industry is still a widely fragmented industry, presenting an opportunity for consolidation in order to seek synergies and economies of scale. This can be witnessed from the active consolidation by Private Equity over recent years.
You are bullish about the prospects of the MICE industry despite the current gloomy market sentiment in relation to the Covid-19 global pandemic. What numbers and which research papers sustain your vision?
For the past 18 months, the distressed MICE industry has been undermined by government efforts globally to contain and combat the pandemic as international borders closed and social and business events cancelled. China, was an exceptional exception as its domestic market was large enough to muscle through and delivered considerable revenue for the industry. We’ve conducted interviews with the top MICE-related companies to gain a deeper understanding and insights into their businesses, as well as their perspectives of the recovery ahead.
They have collectively shared that they received unified feedback about their clients wanting to resume face-to-face physical events. According to the BCD Travel Survey, business travellers pinpoint the shortcomings of virtual meetings and prefer physical events and meetings as the most conducive environment for conducting business activities and relationship building.
Taking a look at the revenue levels of the top 10 MICE-related companies in 2019 and 2021, one will be able to notice that the revenues have dwindled comparatively by 50 per cent or more. During this period, many of these MICE-related companies have also taken the opportune time to review their business structure and implemented cost-cutting measures and pivoted to new business revenues, strengthening their balance sheet and consolidating their position to make a concerted comeback.
You state “The goal is to invest in publicly listed stocks of Companies operating primarily in the MICE industry” – could this goal vary along the coming months and potentially include privately-owned successful start-ups and companies?
The Arena fund is currently only investing in publicly listed companies. We regard this as a teaser for new investors as a prelude to private companies. Once the Arena fund is up and running, we may look at launching a second fund to capture the investment opportunity in private companies in the MICE industry, which would involve both traditional event organisers, as well as technology innovators in the sector.
How is the MICE industry facing the intense digitalisation of all economies?
The MICE industry is indeed facing unprecedented challenges, with the pandemic accelerating the transformation and consolidation of this industry. However, the industry is also one that relies heavily on face-to-face and physical interaction.
Surveys, research studies, and experiences conducted on business travellers and MICE industry players have all echoed that the physical element is of paramount importance especially when it comes to conducting business events such as procurement of new equipment, where buyers are able to have a physical assessment of the product before purchase during a trade show.
While it is true that virtual/digital meetings can provide their own set of benefits such as eliminating geographical distance and the ability to hold large meetings, in-person meetings hold an intrinsic and intangible value when it comes to building chemistry, fostering networking and eliminating distractions.
We strongly believe that while digitalisation is here to stay and evolve even more over time, it will be a complement rather than a replacement of physical meetings. As such MICE offers not only great future potential on digitalisation but also on the human interaction and networking concept.
What do you define as “Hybrid events”?
Hybrid events are events that are typically run live from some venue or exhibition centre where 30 – 60 per cent are streamed to an online community. This offers flexibility and convenience to people who are faced with travel restrictions and unable to attend the trade show physically to still be able to access the content remotely.
What are some other fast-emerging trends you see in the MICE industry?
We can see that niche themes are being exploited after the pandemic. Food Trade Exhibitions have been long-running and popular worldwide, and now we see evolution and expansion to the current theme to include specialised food shows such as craft beer, craft bakery, vegan, etc.
This is a laudable trend as it ensures inclusivity where the special communities are able to interact for their product of interests. We also see “Festivalisation” as an emerging trend of the industry to offer more content-related events such as seminars, conferences, speakers’ corners, panel discussions, networking areas, bars, music, etc, transforming cities and redefining the conference model.
When selecting MICE-related companies in which to invest, what is your vision and what are some measurement tools you have put in place?
We first go through a rigorous selection of all the MICE-related companies in our stock universe and then study their MICE-specific revenue. Each underlying company that the Arena fund will invest in is unique and offers some new innovations. For instance, CTS Eventim, based in Germany, is a leading ticketing software and hardware provider while Informa is a global leader for B2B exhibitions and content platforms.
However, other companies such as Pico have shown good developments and potential through their 3D online exhibition platform & digital booth templates, and theme parks & museum offerings. Investors get to enjoy a diversified basket of product innovations that the MICE industry offers. With this research, we have created an innovative revenue-adjusted capitalisation-weighted index of MICE stocks.
How vibrant is the start-up ecosystem in the MICE industry? Are there examples of young companies which have enjoyed an amazing growth in recent years?
Absolutely — currently the Arena fund only invests in established publicly listed companies but we can see also a great start-up scene of younger private companies entering the scene. Just to provide a few examples, Jublia in Singapore is an EventTech company and has operated for seven years in the EventTech market. They provide great solutions for networking and matchmaking and employ a 40-man team worldwide.
We expect great results from the three owners of Jublia. Another company is Fortem International, which recently relocated to Singapore from London, offering unique and innovative show and exhibition concepts. We will monitor with great interest the start-up market to prepare for our next joint venture project between Abacus Capital and Exhibition International Investment Partners into the exciting start-ups in the MICE sector.
How healthy is the current M&A deal flow in the MICE industry? Do you have some inspiring examples?
M&A has ground to a halt in the last two years. We have seen that Private Equity companies such as Charterhouse with Tarsus have just started some M&A activity in China. We believe that M&A in this sector will be very intense in 2022 once the skies have fully opened and exhibitions globally are running again. We recall the large deals in 2019 where GL Events raised US$200 million in private equity to invest into the sector, as well as the acquisition of UBM by Informa plc with a current US$10.8 billion market capitalisation.
What makes the advisory team of the fund unique to the success of Arena Fund?
The Fund is led by a team of CEOs and business leaders in the MICE industry, with each individual having over 20 years of experience running companies with global operations such as Expos Asia, Informa, and ExpoDevCo.