Day two of the IR Magazine Global Forum & Awards kicked off with two investor-focused sessions: the first of the day looked at targeting techniques. Click here to read a round up of day one.
Sergio Gámez, global head of shareholders and investor relations at Banco Santander, talked about how the Spanish banking giant has ‘a substantial number of retail shareholders’, making up as much as 40 percent of its shareholder base. These retail investors – more than 4 mn in real terms, with around two thirds coming from Spain – offer something very valuable: low volatility. ‘They are anticyclical compared with institutional investors,’ Gámez noted. ‘They buy when institutions sell.’
The second panelist on the stage, Larisa Sadovnikova, head of investor relations at Inter Rao, added that she varies her investor targets depending on company events. An update on the free float? Talk to index funds. M&A activity? Reach out to hedge funds.
Each panelist stressed the importance of really understanding both your investor base and your potential investors – down to seemingly simple details like when they can actually meet with you – and added that the ‘still very valuable’ sell side should be leaned on when necessary.
Like the previous day, however, trust was top of mind. ‘Trust is necessary to succeed,’ said Gámez. ‘We’re asking for people’s capital. They need to know that we are not going to share everything we know but they need to 100 percent trust that we are not going to mislead them.’
From investor targeting, the forum moved to investor education, with a session on deepening generalists knowledge, moderated by Wim Allegaert, chair of BelIR, the Belgian IR association.
Like the previous panel, this three-strong group was made up of companies with notable retail bases. One, an oil and gas exploration firm, uses ‘glitz and glamor’ to cater to this constituency, offering a daily webcam upload from a new drill site, for example, or using a WhatsApp-like chat tool to give 600-800 retail investors a two-hour Q&A opportunity with management once a month.
‘Don’t be afraid to use new tools,’ advised Sarah Dees, head of investor relations at Sound Energy. ‘Make it look more interesting – especially if you want to do something for retail.’
Nanobiotix, winner of the 2017 people’s choice award, also has a strong retail base but, as more biotech specialists have come on board, Noël Kurdi, head of IR at the Paris-based company – who is based in New York and whose team goes out on non-deal roadshows every six to eight weeks – says it has seen an increase in generalists.
So how does the panel attract generalists? All agreed that generalists take more time and certainly require C-suite involvement. And if you’re looking to diversify your investor base with retail, it’s as much about reputation as financial communications.
Before lunch the conference moved again to ESG – a topic also visited the day before – with a panel comprising two investors and two from the IR side, moderated by Mikkel Skougaard of MOL Group, who has been on both sides of the table.
All agreed on the importance – and growing importance – of ESG and sustainable development goals or SDGs (the main point of conversation for the panel). Both IROs stressed the integral role ESG plays in the materiality of their firm and the shareholders and customers they represent.
On the buy side, the discussion ranged from data providers and their own in-house research to how the buy side isn’t looking for ‘colorful reports and SDG-washing’ and making investment decisions for the long term. ‘If the share price dropped in a quarter, we wouldn’t make investment decisions based on that,’ commented one, talking about simmering down a universe of around 2,000 to 600. ‘It’s about engagement – where is the company going? But we do need data.’
And while the IROs on the panel noted that investors tend to separate out into equity and sustainability, those from the buy side said they preferred an integrated, holistic approach. ‘I hope in future this won’t be a separate tract,’ commented one. ‘We have to think about materiality so you would hope all the equity people would also be asking about these elements.’
The ESG session – which could arguably have gone on much longer – gave way to lunch followed by a candid fireside chat with Andrew Gebelin, head of research at Glass Lewis. Stressing that proxy advisers, and Glass Lewis specifically, are there to advise their customers, he said the aim is always to promote stewardship and to allow the customer – the investor – to exercise its fiduciary duty.
Touching on trending topics, Gebelin noted the ever-present issue of remuneration, still rearing its head (UK housebuilder Persimmon got a mention). The continued focus on remuneration – and voting on pay packets – is indicative of a lack of patience among investors on the issue, said Gebelin, who also stressed the heavy reputational risk such stories carry as they play out in the media.
He offered some tips on engaging with proxy advisers, too, mostly around timing: don’t leave engagement until too late in the season and don’t wait for an issue to become a problem before you flag it. As always, be transparent and honest, and line up the right people to talk. Also of note: Glass Lewis is now using corporate access platform Meetyl to schedule meetings with both investors and corporates.
Closing the two-day event was a session on building the business case for IR with Alison Griffin from small-cap Dynex Capital (which has an IR team of one) and Veronika Bunk-Sanderson from the far larger Telefónica Deutschland each sharing many common experiences. Although Griffin outsources a lot and says she considers the likes of Ipreo and Q4 to be trusted extensions of the IR team, both IR professionals’ wish lists – in particular, more bodies for the IR team – remain the same.
When it comes to getting buy-in for IR, Bunk-Sanderson explained her ‘bear hug’ strategy, which sees her get in among as many employees and internal sources of data as possible. The opening up of these internal channels is essential, she said, as is using the right external advisers and providers. These channels of communication are one element that really helps to demonstrate the value of IR, with other advice including coming to meetings equipped with more than just the KPIs, bringing that bit extra that highlights the value-add you’re offering through IR.
The panel stressed that the perception of IR is something IR professionals themselves have to take responsibility for. Again, the word that came up was ‘trust’ – with an emphasis on building patterns of trust so that information can be easily shared both in and out of IR.