New Position: Informa

We recently initiated a position in Informa PLC, a global leader in business-to-business exhibitions and publishing. The company is a holding in all three Evenlode strategies now so readers may be familiar with its business, but here is a short description for those new to it. Informa’s main competitive advantage lies in the powerful network effect generated by its large-scale in-person and digital events. As more industry participants attend Informa’s exhibitions, the value of these platforms increases for all parties, attracting more exhibitors, more attendees, and more content, which in turn reinforces the company’s market position. Around 80% of revenue comes from its Events division (Markets, Connect, Festivals, Tech). The remaining c.20% comes from Taylor & Francis, an academic publishing business featuring highly recurring revenues, strong margins and cash generation. This division adds a degree of counter-cyclicality to the group as when events slow, academic subscriptions remain resilient, helping stabilize overall performance.

Events provide exhibitors and attendees access to targeted audiences, industry insights, and commercial opportunities, often resulting in returns to Informa customers that deliver healthy multiples on their attendance costs. For venues, Informa brings large, professionally run, recurring events without owning the physical real estate. This asset-light model enables scalable growth and drives sustainable revenue for hosting cities and centres.

The company’s portfolio spans many industries ranging from healthcare to technology and infrastructure. Examples include events such as World of Concrete and International Boat Shows. While these brands may be unfamiliar to outsiders, they are must-attend gatherings within their industries, where significant business is conducted.

Looking forward, we believe there is room to further monetise the data Informa collect during events by providing further value-add to customers while strengthening their competitive position versus smaller or less commercial events operators. Another opportunity lies in the fragmented nature of the global exhibitions market, which still consists of many regional or niche players. Informa has capitalized on this fragmentation through acquisitions such as the recent purchase of Cannes Lions, the world’s leading marketing festival.

The addition of Informa was funded by the disposal of Kuehne & Nagel. Kuehne & Nagel is one of the largest global freight forwarders, mainly dealing with goods transported by ship and plane.

This swap improves the defensiveness and competitive quality of the portfolio in a volatile time for the economy. Comparing the two companies, Kuehne is more cyclical and has less revenue visibility than Informa. Kuehne is directly impacted by changes in trading volumes and freight rates while much of Informa’s revenue is recurring or booked a year in advance. The freight forwarding industry is also quite fragmented and while the barrier to scale is high, the barrier to entry is lower than for Informa, which means competition is more intense. Given the cyclicality of Kuehne & Nagel it has always been a small position in the portfolio at a little over a one percent holding.

Kuehne’s valuation was looking fair on our estimates, but with Informa’s stock having tracked sideways for the last two years or so it has started to look relatively appealing as its earnings have grown. For cyclical companies, we prefer to hold them when the valuation is looking attractive as this gives some margin of safety when earnings are more volatile. The switch was thus driven by the combination of valuation and management of portfolio fundamentals.