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Apr 02, 2017

Top tips for targeting investors

From research providers to direct targeting and mixing up the conference schedule

‘The process used by companies to identify and approach appropriate, potential institutional investors’ is how NEVIRpedia, a Wikipedia-like Dutch site for investor relations professionals, describes investor targeting. ‘It is an essential part of shareholder identification: knowing who your shareholders are and therefore also identifying who [they] are not. Investor targeting could be a means of ‘filling in the gaps’.’

Many IROs think of investor targeting as a permanent investor roadshow, flying all over the world to visit every asset manager you can think of. While these roadshows are useful, they are extremely time and budget-consuming, and there are far more efficient ways of targeting investors. 

Get help – but mix it up 

Most IR research firms – Corbin Perception being one example – have dedicated investor-targeting services. Some firms, like Ipreo, are dedicated investor-targeting outfits and offer a range of expertise across markets. Even Nasdaq runs an investor-targeting program alongside its shareholder identification service.

But if you use the same research provider all the time it can limit the group of investors you are seeing. It also means you’re likely to see the same investors year in, year out. Mixing it up can open up a completely new channel of investors.

The same goes for conferences: attending conferences is a great way to meet lots of investors in one place, but you don’t want to see the same investors over and over so it works to attend a shifting mix of conferences, which will expose you to different sets of investors. 

Go it alone

While outside firms can help, IR Magazine’s 2015 research report, Direct targeting: What’s changed?, shows that almost half of IROs have increased their direct targeting of investors, sidestepping the sell side and reaching out to existing and potential investors themselves. In fact, just 2 percent of the 665 respondents say they have reduced their level of direct targeting. Four case studies in the report show that at companies from William Hill and WW Grainger to StarHub and the Hartford Financial Services Group, most IROs opt for a mix of tactics.

Think outside the institutions 

IROs should also consider other sources of investors, such as registered investment advisers, family offices or pension funds. Since these don’t generate commissions for advisers, they often fail to make it into the mix. And although many pension funds are largely indexed, they are increasingly actively managing their assets and so are becoming a good new source of investment. 

Jeff Tha, CEO of corporate access technology provider Meetyl, says: ‘Most companies have contacts with institutional investors, but some – including real estate investment trusts, energy companies and other investment trusts – are looking to supplement their investor group with high-net-worth investors. These are mid-cap companies that want to expand their investor registry beyond the 50/50 institutional/retail make-up that is common.’

Check out the tech

Tha suggests video or virtual communications services such as those offered by the London Stock Exchange or OpenExchange as useful alternatives for those looking to target without the travel. There are also software solutions, such as Classify by Issuer Direct, a cloud-based software system that can be used to target and identify investors, while Meetyl has an end-to-end targeting and engagement offering where a live community of 1,000+ institutional investors log their interests in granular detail. 

Think internationally 

Today’s investors are thinking and investing globally, so it is important that IROs think internationally, too. But that doesn’t mean you should restrict your focus to the main investment hubs. Going beyond the New Yorks and Londons of this world can pay off with new and different groups of investors, and you can find top-flight investors in second or third-tier cities. 

Watch your peers

IROs should conduct comparable company ownership analysis. If an investor is already invested in an industry it will have done its research – and will know about the industry, its trends and your company already. This means the investor is already interested in the sector and any meeting you have can focus on your story rather than on having to educate the investor from scratch.

Finally, it is not always necessary to go to your target investors – you can have them come to you. Hosting a one-day corporate visit is an efficient way to meet a lot of investors at one time, as well as an effective opportunity to familiarize them with your company in the best place to do so: on site.