When Charlotte Parry joined London-headquartered small cap Arix Bioscience as IR manager in September 2017, she set about creating a targeting strategy that saw new shareholders added to the register, more in-depth feedback from the buy side and a new focus on private wealth.
‘As a small-cap company, with a fairly high-risk profile and low liquidity, our post-IPO corporate access from banks was extremely poor,’ explains Parry. This, coupled with the implementation of Mifid II in January 2018 – a regulation largely expected to impact smaller companies most – set the backdrop for Parry’s new targeting program.
Despite being a one-person investor relations team at the £209 mn ($279 mn) market cap firm, Parry says that as far as targeting new investors went, she had four key objectives. The first was ‘to get management in front of a much wider audience, including those investors typically deemed difficult to access but that are less constrained by liquidity levels, such as family offices and wealth managers.’ She also wanted to make the Arix Bioscience story more accessible to generalist investors, increase understanding of the investment case and diversify the share register.
A previous IR account director at Edison Research, Parry says this experience gave her an edge. ‘My large network of investors and experience in organizing and executing roadshows has allowed me to methodically target potential shareholders to help them better understand the strategy and long-term potential of the investment case,’ she explains.
Parry arranged more than 60 meetings in the last year with investors that had not previously met with Arix, prequalifying all investors ‘to ensure effective use of management time’ and recruiting other departments where possible. She also expanded the range of investors the firm was targeting, organizing regional UK meetings and conference calls to see pension funds and wealth managers, and worked with an external media company to produce a six-minute video to market the company to retail investors.
The final prong in Parry’s targeting strategy focused on investor feedback. The in-depth feedback she gathered from the buy side provided ‘useful insight into the key metrics that would drive investor interest, as well as highlighting concerns and requests for more information, enabling me to adapt the presentation and better prepare management for meetings,’ she explains.
Despite the resource constraints faced by almost all small-cap IROs, Parry’s targeting program grew tangible fruit. Her efforts resulted in increased awareness, brought in new shareholders that are less constrained by liquidity and saw her work closely with the banks to build a soft book of potential investors ahead of its capital raise, which saw the company issue 38.6 mn shares and raise £87 mn in March.
Where Arix previously relied on service providers, it now directly organizes roadshows and engages with investors, something that has not only gone down well with investors but also allowed the firm to cut costs, adds Parry, who says she will ‘continue to build long-term relationships with investors, based on integrity and empathy.’
This case study has been taken from the IR Magazine Research Report: IR Objectives & Challenges. Click to download now