Framework of a Successful Corporate IR Strategy

Over the last couple of years we have witnessed a number of significant themes and developments in the capital markets, which have had an meaningful impact on how IR teams think about strategy today. Whether we examine global pension fund reforms, regulatory developments affecting institutional investors and their products, or consider the role that technology plays within the financial industry, we quickly realise how important it is for us not only to understand these themes, but also be able to assess the impact they can have on our strategy.

How do successful companies think about an IR strategy in a rapidly evolving market? A simplified framework, inspired by award winning practitioners, with a few supplementary questions, may provide some clues.

Prioritise your objectives

A good starting point in the planning process is to ask a fundamental question: what are the objectives of the IR team at your company this year? Those objectives should be as measurable as possible and revolve around creating and communicating your equity story and setting it within the context of attracting investors.

The objectives are designed to be carefully prioritised and regularly revised. Crucially every IR team member understands the specific role they play in accomplishing them and has a clear view of the definition of success. A discussion around priorities, both short and long term, often sets the tone for the remainder of the planning process.

Things to consider:

  • Does everyone on my team possess a clear understanding of his or her individual role in executing the strategy?

  • Have I communicated my plan to the main internal and external stakeholders?

  • Are my objectives also laid out alongside a calendar of key dates in the corporate IR calendar, as well as investor conferences, and non-deal road shows?

Enforce the key messages of your investment case

This part of planning involves taking stock of all market and company specific events of the previous year and crafting a succinct equity story. Second, it involves highlighting and articulating the most important elements that you would like to convey to the investment community. And the ‘how’ is often as important as the ‘what’. The most successful IR officers are in fact magnificent storytellers. They understand the competition of investor, analyst and media attention is strong — and with this in mind craft stories that are compelling, unforgettable, smart and often magnetic. They are able to answer the crucial question investors are asking: What makes this company so special?

Things to consider:

  • What macro or mega industry trends is my company’s equity story continually benefiting from?

  • What are the key non-financial metrics that matter in my story?

  • How are the main messages I want to convey to the market reflected in my investor material?

  • When was the last time I practiced a simplified two-minute “elevator pitch”?

Create a solid capital market toolbox

Many companies will attest that it is a vital exercise to discuss what available capital market tools would be most beneficial to help them achieve the objectives they have set out. The process often includes ensuring your collateral (composed of, say, an investor pack and presentations, one page fact sheet, management videos on strategy, IR website) is up to date and reflects the messages you want to convey to your investors and analysts. The choice of the toolkit will go beyond regulatory obligations you need to meet, and depend on the size and make-up of your current and envisaged shareholder structure and the level of analyst and media coverage your advisors can offer. Commitment on resources and budget is also essential.

Many savvy companies carefully monitor and research new tools and technologies that are being introducing to the IR marketplace. Throughout the year, IR Society and Investment Association conferences, as well as leading industry periodicals and surveys, provide good insights into this space and also into new tools.

Things to consider:

  • Do I have a complete view of the resources available to me (internal and external to my team, as well as those provided to me by advisors)? Are those resources satisfactory?

  • Have I created ample opportunities to identify any improvements or challenges to the toolkit so that periodic adjustments can be made?

  • Have I considered how technology based tools in the IR space can help me achieve my objectives?

Understand your investor opportunity

Often at the heart of an IR strategy, many companies take a technical, if not scientific, approach to identifying investor opportunity. A starting point is a comprehensive analysis of your own shareholder base factoring in significant movements over the past four quarters. Next, an institutional investor analysis of peer group, country/region and industry (adjusted to account for company’s size, fundamentals and liquidity) can provide a solid foundation for an investor targeting exercise. If possible, adding to this an overlay, which takes into account the latest fund news and developments, new fund launches and significant asset rotations, can be a useful part in your company’s opportunity map.

Things to consider:

  • Have we segmented our institutional investors and our targets? Do we understand their expectations and our approach to servicing them?

  • Am I confident that my non-deal road show and conference schedule sufficiently addresses the identified investor opportunity?

  • Do we understand the reach of equity sales teams within the brokerages that write research on my stock?

  • Are we spending enough time asking questions to investors and listening to what they have to say? How are we digesting those insights and feeding them into management/board? What other tools are we using to gauge perceptions from the buy and sell side?

Stay ahead of big picture trends

How is the capital market going to look in 2020? What investment products are growing in popularity today, and which ones are ebbing away? Which investment products have been receiving the most inflows over the last three years? How are new technologies affecting trading, capital raising and asset management industries? What impact will the current wave of regulation have on our closest counter-parties? What is influencing Asian investor behaviour and their appetite for diversifying their portfolios outside of domestic markets?

These are certainly fascinating questions, which will no doubt play an important if not transformative role in how the IR profession will look a few years from today.

Things to consider:

  • How do I stay up-to-date with global trends affecting my industry, the wider capital market and IR best practices?

  • Are capital market insights regularly shared and discussed across my team?

  • Does my reading list this year contain an in-depth study of at least one important capital market topic, new culture or global theme?