Effective IR often means striking the right balance between helping to attract new investors, and ensuring the satisfaction, and therefore retention, of your existing shareholder base. But, in a sector where competition for investors is ever-increasing, IROs need to ensure that they aren’t neglecting their current investors in their efforts to appeal to new ones.
Here, Phil Corbett, head of IR at Genel Energy and Miriam McKay, head of IR at Henderson Global Investors, give their thoughts on how IR departments can go back to basics and achieve effective current investor management.
Value your investors: ‘The clue’s in our job title – investor relations – not analyst relations or investor origination,’ observes McKay. ‘We’re a first point of contact between our shareholders and the company, and our job is to help them come to a well-informed view on the company’s value by providing useful information and good access to the management team.’
Understand your shareholder base: ‘IR departments need to ensure they have a good understanding of what kind of investors they have (e.g. short-term hedge fund or longer-term institutional money) and what their needs and preferences are on contact and engagement,’ says Corbett. ‘Some may be quite passive and happy to see the management team around scheduled events, like reporting, but others may be more vocal and want to engage on a constant basis.’
Communicate effectively: ‘Good communication with sell side analysts is important, but it’s not the be all and end all,’ remarks McKay. ‘It must be very frustrating for the buy side if they see conflicting versions of the facts from different sources on the sell side, so it’s part of our job to make sure the facts are clear through good disclosure. This said, it’s important that shareholders know that they are more than welcome to contact the company direct, and that they don’t need to rely exclusively on the sell side.
Use management time well: ‘All shareholders have the right to engage with the company,’ says Corbett. ‘However, management time on IR needs to be allocated optimally. In particular, major shareholders need to have enough interaction to ensure the right level of understanding and trust has been forged.
Be reliable: ‘Building the trust of our shareholders is important,’ explains McKay. ‘It’s not a given and it’s not rocket science, but it really matters. I try to make sure that we reply promptly, accurately and informatively to queries and follow up efficiently after meetings.’ Corbett stresses similar points: ‘My aim is to make sure that current investors understand the strategy and, as far as possible, make sure that changes to strategy and the investment case are seen as evolutionary rather than a complete surprise.’
Don’t cut off former investors: ‘Maintaining relationships with former shareholders can be really valuable,’ comments McKay. ‘We quite often see investors take profit and drop off the register. In many cases, these investors have built a substantial knowledge base, so it’s well worth helping them to keep this up to date, so that they are ready to come back when the opportunity presents.’
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