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Jan 24, 2024

‘Challenging’ capital-raising environment pushes IROs to diversify investment sources

New data reveals increased focus on international investors as well as retail shareholders

IR professionals are increasingly seeking to diversify their share register as the market for capital raises remains ‘challenging’.

New data shows that almost half (48 percent) of IROs say they are focusing more on international investors, while a quarter (26 percent) are putting renewed energy into attracting retail shareholders.

Also driving greater engagement is an increase in non-deal roadshow activity (reported by 49 percent of IROs) and a 53 percent increase in in-person one-on-one meetings over the past year. Others report engaging more with smaller investors, family offices and hedge funds, according to the 15th annual Investor Relations Survey from Citigate Dewe Rogerson.

Talking about sources of capital and ways to increase liquidity, researchers find that secondary listings are not an option for the majority: more than half (54 percent) of respondents have no immediate plans for a secondary listing but say they would not rule out the possibility in the future. Almost a third (29 percent) say they would never consider a secondary listing.

The research, based on responses from more than 150 IR professionals around the world, finds that even as IROs seek to broaden their investor bases, the role itself continues to expand and become more complex. In fact, just 28 percent of respondents say they now exclusively handle core IR functions. Instead, IROs ‘are extending their influence’ into other areas, such as communications (38 percent), ESG (38 percent), corporate strategy (32 percent) and finance (27 percent).

‘While this increasing remit and influence can be broadly seen as a positive, it arguably comes at a time when IROs need to focus on their core IR responsibilities to navigate a challenging environment for capital raising,’ says Citigate.

With IROs increasingly tasked with ESG communication and reporting duties, Citigate surveyed respondents on how their companies are faring with their climate goals.

A majority of respondents (61 percent) say their firm is on track to achieve its ESG or net-zero targets, with a further 24 percent partially on track. ‘Many respondents call for standardized reporting frameworks and questionnaires to reduce the time spent responding to ESG data requests, a task which is increasingly falling within an IRO’s remit,’ notes Citigate.

There is also a strong focus specifically on the G in ESG, with 85 percent of respondents saying their firm has ESG representation at either the board or senior-leadership level – something Citigate says is an indication that the majority of companies are taking governance matters seriously.

‘Given the volatile macroeconomic backdrop and a rise in anti-ESG sentiment, some may have expected investor priorities to shift, but the research shows non-financial metrics are here to stay,’ say researchers. ‘More than 90 percent of respondents indicate that they have either seen investors increase their focus on non-financial metrics (45 percent) or seen no change in investor priorities (48 percent) in the current climate.’

Anna Clauser, IR director at Citigate Dewe Rogerson, says that despite ‘the expanding role for IROs, our survey found that budgets are being squeezed. Reduced budgets coupled with increasing demands poses a risk of compromising quality, potentially impacting investor outreach, constraining technological advancements and hindering strategic initiatives.’

Commenting in a statement accompanying the report, she adds that ‘ultimately, this challenge makes it difficult for IR teams to fulfil increased expectations in communication and stakeholder engagement.’

Garnet Roach

An award-winning journalist, Garnet Roach joined IR Magazine in October 2012, working on both the editorial and research sides of the publication. Prior to entering the world of investor relations, her freelance career covered a broad range of...