Spotlight on IR in Europe
This article was produced in association with ELITE Connect. It was originally published on the ELITE Connect platform.
As an established market with most of its current investment risks stemming from outside the area, Europe is arguably in a better place than most other global regions. Despite this relatively strong home position, however, issues ‒ such as Brexit ‒ are looming on the horizon.
When we take a look at some recent figures*, it’s clear that European IR departments appear to be far from complacent. Not only do they enjoy the highest global budgets ‒ an average of $526,000 compared with the worldwide average of $491,000 ‒ but they are also the largest in the world, exceeding the global average of 2.6 team members, with an average of three.
European IR teams undertake more investor meetings annually than their regional counterparts, too. The average figure for Europe’s IR teams is 259, compared with a global average of 204. Senior management in Europe attends 40 percent of one-on-one meetings on average, compared with 44 percent on a global basis, indicating that European IROs are stepping up and handling a larger proportion of meetings themselves than IROs in other markets.
When it comes to conferences, European IR departments attend slightly more than other global regions with an average of eight, compared with 7.5. Reinforcing the effectiveness of this strategy, Barbara Seidlová, head of IR at ČEZ Group, comments: ‘Investor conferences are an excellent IR tool that we find invaluable, both for attracting new investors and for communicating to a broad audience. For us, the fact that we can spread our IR activity across two areas – both emerging and European utilities markets – means we’re lucky enough to have two conference audiences to focus on.’
It’s clear, then, that European IR is above the global average in terms of meetings, conferences, staffing and budget numbers, but what are its current issues? Zafar Aziz, head of DR market solutions at Deutsche Bank, points to sustainability and corporate governance as subjects that are increasing in importance, with corporate governance roadshows in particular growing in popularity.
Passive investment ‒ namely exchange-traded funds ‒ is another consideration, with greater inflows here compared with active investment. IROs have realized they still need to engage with these institutions, especially when it comes to proxy voting.
Finally, investor activism is a growing trend, as Aziz explains: ‘We’re seeing a number of high-profile investor activism cases emerging, such as Rolls-Royce recently granting a board seat to ValueAct, an activist investor. Companies are becoming more aware of the issue and putting plans in place to work out how to monitor and deal with activists once they appear on share registers.’