IR30: A look back to October 1997 – IR goes global
When Neil Stewart covered the findings of an IR Magazine survey for the cover of the October 1997 issue, he found that IR had indeed ‘gone global’.
‘Most big companies,’ he wrote, ‘are trying to increase their foreign ownership’, with IR programs increasingly being pitched toward an international audience.
IR Magazine October 1997:
‘The trend toward increased foreign ownership is definitely escalating,’ Frank Stevens, then with DF King Europe, told Stewart. ‘US pension funds have been dramatically increasing their foreign equity investments, while European investors that led the way in cross-border investments are keeping up the pace.’
The survey that formed the basis of the cover story found that North American foreign ownership stood at 12.7 percent, with the region’s IROs averaging 18 percent of IR hours on international efforts. It was those in Europe leading the march toward global IR, however, with 40 percent average foreign ownership and half of IR time dedicated to expanding and servicing the international shareholder base.
‘The evidence,’ concluded Stewart back in 1997, ‘shows clearly that companies are firmly committed to increasing foreign ownership, and results are slowly but surely following.’
Foreign ownership today
Rather surprisingly, for some regions those numbers remain almost completely unchanged over the 21 years since Stewart looked at the issue. Among North American companies, for example, IR Magazine research from this year shows that just 13.5 percent of the shareholder base is international – far lower than peers in Europe or Asia.
In Europe, almost a third (32.8 percent) of the investor base is made up of foreign ownership on average, but it is companies in Asia that have done the best job of growing a global investor base with an average of 41.8 percent of shareholders coming from outside the region.
Over the years that IR Magazine has been studying these numbers, there has been some fluctuation: North American companies averaged a high of 21 percent foreign ownership in 2013, though that was unusual for the region, while Europe enjoyed a high of 34 percent foreign ownership in 2014 and a low of 24 percent just the year before, and Asia averaged a high of 48 percent in 2014. Numbers today remain more or less as they were back in 1997 – but that doesn’t mean IR didn’t go global.
Today’s IROs spend a significant amount of time on the road and traveling to meetings, with some international companies having equally international IR efforts. Gerbrand Nijman, then VimpelCom head of IR and now CFO of Global Telecom, talked to IR Magazine in 2014 about the challenges of having IROs spread across different continents.
‘It obviously affects IR when you’re operating in several countries,’ he said. ‘You have to take certain measures and a very structured approach to deal with the many time zones and different locations. There needs to be a great deal of co-ordination within the team, and I have teams in four cities – Moscow, Rome, Cairo and Amsterdam – so any activity in IR really is 24/7. The business in Cairo is open on Sunday, for example.
‘With this set-up you need very short communication lines within the team. We’re not located in the same office but we still have to make sure we send a consistent message to the market. For example, we created a chat application to instantly inform our colleagues in other countries when we have been approached by a certain analyst or investor. But we don’t need to agree on answers [as they come up] because we have agreed [them] beforehand. We have a very well-written Q&A document.’
As IR Magazine builds up to its 30th anniversary issue – the upcoming winter 2018 issue, which will be the 279th edition of the industry’s flagship magazine – we’ll be posting more throwbacks to old covers, revisiting some of the hot topics from the past 30 years of investor relations and hearing from some of the industry titans.