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May 16, 2023

Investor targeting: Differences between long-standing public companies and recent IPOs

Considering investor bases and appetite, market perceptions, growth stage and Mifid II

Investor-targeting strategies may differ between a company that has been listed for several years and one that has recently gone public. The key differences are in the investor base, market perception and growth stage of the company. Let us examine these distinctions.

Investor base

A company that has been listed on the stock exchange for several years usually has an established investor base. These investors may include institutional investors, long-term shareholders and retail investors who have followed the company’s performance over time. Investor relations professionals for such companies focus on maintaining relationships with existing shareholders, providing them with regular updates on the company’s performance and addressing any concerns or inquiries. It is also much easier to target audiences because a base is already in place.

A newly listed company, on the other hand, has a relatively small investor base. For such companies, the focus of investor outreach is more on broadening the investor base and attracting new shareholders. They may need to target a broader range of investors, including institutional investors, sector funds and retail investors who are actively seeking new investment opportunities. With no investor base other than the pool from deal roadshows, IR professionals must find creative ways to reach potential investors.

Market perception and visibility

A company that has been listed for several years is likely to have established itself in the market and enjoy greater visibility among investors. These companies have a track record of success and have proven they are able to weather market cycles. Investor outreach efforts for these companies are often focused on building market awareness, enhancing brand reputation and attracting new investors that are aligned with the company’s growth trajectory. Investors can easily rely on the storyline and compare what is being done and how it is being done.

By contrast, a newly public company faces the challenge of making itself known and credible in the marketplace. Investor outreach strategies for these companies focus on raising awareness of the company’s business model, competitive advantages, growth potential and differentiation. They may need to conduct targeted marketing efforts, investor education initiatives and investor conferences to increase awareness and capture investor attention. Investors are bombarded with information about stocks and new companies throughout the day. Getting your foot through the door is much more time-consuming and, as there is less sell-side support since the introduction of Mifid II, investors rarely learn about the new company.

Growth stage and investor appetite

Companies that have been listed for several years may be in a different growth phase from companies that have only recently listed. Established publicly traded companies may have experienced steady growth and reached a more mature stage of their business cycle. Investor-targeting strategies for these companies may focus on attracting long-term investors seeking stable dividends, consistent earnings and proven business models.

Investor targeting: Differences between long-standing public companies and recent IPOs

On the other hand, companies that have only recently gone public often have higher growth potential, which can attract investors looking for new growth opportunities. When attracting investors to these companies, the focus is on communicating the company’s growth prospects, upside potential and ability to capitalize on market trends. Targeting investors interested in early-stage or high-growth investments is a priority. It is essential for IR professionals to develop a story and tell it at each stage of the company’s growth.

Investor relations maturity

A company that has been listed for several years usually has a well-developed investor relations function, established processes and experienced professionals to handle IR. The focus of the IR team may be on maintaining open communication, holding regular investor meetings and managing the expectations of existing shareholders.

Conversely, a newly public company may be in the early stages of building its investor relations function. Strategies for these companies may include developing IR capabilities, building relationships with key investors and establishing effective communications and reporting processes.

In summary, investor outreach strategies for companies that have been publicly traded for several years differ from those that have recently gone public. Established companies focus on maintaining relationships with existing shareholders and building market awareness, while companies that have recently gone public focus on expanding their investor base, building a market presence and communicating growth potential.

Understanding these differences enables IROs to effectively adapt their strategies and target the right investors depending on the company’s stage of growth and market position. Needless to say, the supporting tools are therefore critical. What seems to be a normal budget and a necessary investment for a long-established company can sometimes be extremely costly for newly listed companies.

Mifid II impacts

The impact of Mifid II and the Covid-19 pandemic on new IPOs is significant, especially when it comes to finding the right investors. Under Mifid II, the unbundling of research costs has led to a decline in the availability of research coverage for smaller and mid-cap companies. This decline in sell-side research coverage makes it more difficult for new IPOs to become known to investors. Without research reports from investment banks, it becomes more difficult for companies to reach a broad investor base and capture the attention of potential investors.

To overcome this challenge, companies going public must proactively develop their own investor communications strategies. These include creating comprehensive investor presentations, prospectuses and roadshow materials to make their investment case and differentiate themselves from the competition. Working with independent research providers and using digital platforms and targeted marketing efforts like a long-standing company would can also help raise awareness of the IPO and reach the right investors.

Müge Yücel is director of investor relations & sustainability at Galata Wind

Müge Yücel

Müge Yücel is director of investor relations and sustainability at Galata Wind Enerji AS. Galata Wind is a renewable energy producer with wind and solar plants. It is known as the first green IPO in Turkey and went public in April 2021. Yücel is...
Director of IR and sustainability at Galata Wind Enerji AS