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Aug 25, 2023

Targeting new investors top priority at small caps

Boosting existing shareholder relationships and increasing international share ownership also among top three objectives

More than 80 percent of IROs at small-cap firms say targeting new investors is their top priority, followed by enhancing engagement with current shareholders (46 percent) and increasing international share ownership (39 percent). 

This is according to the latest IR Magazine Small & Mid-cap IR report, which surveyed more than 1,700 IR practitioners over the past 18 months. The report provides data on and insights into IR practices across a wide range of areas such as budgets, salaries, team sizes, reporting structure and objectives, among others. 

The research notes that engaging with new investors, working on existing relationships and increasing international share ownership are also the three highest-ranked objectives at large and mega-cap firms. 

But while small and mid-cap IROs make targeting new investors their absolute priority, IR practitioners at large and mega-cap firms deem it only as important as enhancing engagement with their current investors.

Small-Cap report

Marcin Droba, head of IR at small-cap firm LiveChat Software, agrees that, for the majority of IROs at small caps, bringing on board new investors is a focus but also a challenge.

‘This is not an easy task because, objectively, not every company has the potential to become a ten-bagger,’ he tells IR Magazine.

‘Other barriers, such as low liquidity, make such companies uninvestable for many investors.’

Droba notes that, as LiveChat is undergoing some changes, the company is currently focused on ensuring its current shareholders remain informed as opposed to actively targeting new ones.

‘LiveChat Software is in the process of changing its name, introducing changes to its strategy and responding to market changes resulting from the development of artificial intelligence,’ he says. ‘As such, our priority is to communicate these challenges and changes to the current investor base.’

Better disclosure

Improving disclosure falls within the top three priorities for IROs at mid-cap companies, with 38 percent of them naming it as a primary objective of their IR program, according to the research. But this goal doesn’t make it into the top three for IROs at small, large or mega-cap organizations.

Beyond top figures, the research shows that both small and mid-cap IROs place greater importance on increased research coverage than large or mega-cap IROs – an unsurprising finding given the lower levels of coverage at smaller companies. IR Magazine research has found that the average number of analysts covering a company is more than four times higher at mega-caps than at small caps.

Raising capital is a primary objective for 23 percent of small-cap IROs, states the report, although it’s not a priority for IROs at mid-caps, large caps or mega-cap companies. 

By contrast, small-cap IROs are less concerned with increasing investor feedback and improving management accessibility than IROs at companies of other sizes.

The Small & Mid-Cap IR report is available to IR Advanced subscribers. 

See the sample: 

Click to read Sample: Small and Mid-cap IR Report 2023