The biggest trends facing IROs in India
Ahead of the forthcoming IR Magazine Forum & Awards – India in Mumbai, we caught up with Ashwin Bajaj, head of investor relations at Adani Group’s energy companies. Bajaj recently joined Adani having previously spent nine years in IR at Vedanta Resources and some of last year as an IR consultant with Churchgate Partners.
In this article he talks about his new role, the IR challenges in India right now, and how he got involved with IR Magazine’s events.
You’ve just begun a new position as head of investor relations at Adani’s energy companies. Can you tell us a bit about the role and what’s unique about this new chapter in your life?
I run IR for the Adani Group’s three listed energy companies, all of which are leaders in their respective fields:
- Adani Transmission (market cap $3.5 bn) is India’s largest private sector power transmission company. It is also one of the few non-state-owned Indian companies to have an international investment-grade credit rating
- Adani Power (market cap $2.6 bn) is India’s largest private sector power generation company
- Adani Green Energy (market cap $1 bn) is India’s only listed renewable power company.
Each of these companies has its own unique investment case, and room to further build up its IR program, grow the institutional shareholder base and increase liquidity. It is extremely interesting that the three companies span (almost) large cap, mid-cap and small cap, respectively. I am very excited to put my global IR and corporate finance experience to work.
ESG investing seems to be growing in India, with Kotak being the first asset manager to sign the United Nations Principles of Responsible Investment and Avendus Capital launching the first dedicated ESG fund. What are you observing in terms of ESG and IR?
The Indian market has a lot of participation by global investors, as India has a 9 percent weight in the MSCI EM Index. Companies engage on ESG with their global shareholders, which have had an increasing expectation on ESG parameters over the years. With Indian funds now beginning to focus on ESG, there is an opportunity for companies that do well on ESG, and have good disclosures on ESG, to leverage their efforts and attract a new pool of Indian capital into their register.
The IR and sustainability teams at Indian companies need to step up to these increasing expectations on ESG disclosure and engagement.
What other trends are going to have a big impact on investor relations professionals over the next 18-24 months?
There are a couple of trends having a big impact on IR:
1. Mifid II and a shrinking sell side mean companies need to be much more proactive and targeted in their efforts to reach investors. They cannot rely on the sell side to reach investors and market their company as much as they used to five or 10 years ago
2. Governance and activism continue to grow exponentially in India. In the last six months we have seen many issues and companies in the spotlight of the media and investors. Companies need to be very aware of these aspects, and strengthen their governance and related disclosures. The IR and communications teams also need to be very proactive and nimble, and be able to respond to any concerns that crop up and prevent them from snowballing into a crisis, which is not always easy.
All this means a larger workload for the IRO and IR team, and companies need to ensure enough bandwidth to be successful at investor relations. IROs also need to have a strong voice and reach within the company to be able to do their job effectively.
In three words, what are the most important characteristics or traits a successful IR officer needs to have?
Responsiveness, realism and respectfulness.
You’ve worked with listings in India, the UK and the US. What are the main differences you have observed between India and UK/US listings?
Let me talk about one particular area. I believe the Indian market still needs to evolve in the area of fair disclosure. In the US, you have Regulation Fair Disclosure. The Securities and Exchange Board of India has similarly recently strengthened the rules in India governing unpublished price-sensitive information. Companies need to follow the spirit of the rules and not merely the letter.
A lot of companies still tend to go by the disclosure philosophy of ‘Let’s disclose as little as possible, and we will answer further questions verbally’. The result is that you often end up disclosing meaningful information selectively in various meetings and conversations, which goes completely against the principles of fair disclosure.
Let me offer some food for thought: large global investors may stay away from your stock if they see that they have an information disadvantage with your company because you provide a lot of valuable information only through constant and detailed interaction!
You have been a fantastic help organizing the IR Magazine Forum & Awards – India, both in 2018 and this year. What led you to get involved, and what are you most looking forward to at this year’s event?
I am very passionate about investor relations, and when IR Magazine said last year that it was considering doing this event in India, I was happy to get involved and offer my assistance. The forum is a great way to advance the dialogue on IR, share best practices, network and recognize achievements. It was heartening to see a great turnout last year, especially from a lot of IROs from across India. I am sure this year’s event will build on last year’s success and be even bigger!
Tell us a little bit about your role in the forum, what you’re speaking on, and some of the discussion points.
I will be moderating the Q&A panel with the buy side and sell side. It is sometimes hard for IROs to know what it is their key stakeholders – the buy side and sell side – really value and what they view as successful IR programs. I hope to probe the panelists on these aspects, which should provide some valuable insight for IROs.
To find out more about the upcoming IR Magazine Forum & Awards – India, taking place on Friday, June 14 in Mumbai, please click here.