Citigate Dewe Rogerson’s 9th annual investor relations survey places investor education at centre stage as companies prepare for MiFID II
Citigate Dewe Rogerson’s 9th annual IR survey, based on responses from 224 Investor Relations Officers at leading companies across the world, reveals how MiFID II is prompting companies in Europe, and beyond, to take a more active and direct role in educating investors.
Implementation of the new rules is expected to trigger a further consolidation in the level of sell-side research and diminish the ability of banks to provide corporate access services. In this context, ensuring that the investment community understands the corporate strategy is a key objective to be achieved by a) making information materials and the company website work harder at conveying key messages and b) proactively communicating with investors through one-to-one meetings and company-hosted events.
Our research findings show that:
- 85% of IROs surveyed expect to focus on ensuring that the investment community has a better understanding of their corporate strategy over the coming 12 months, with 41% hoping to change investor perceptions of their company
- 76% proactively approach potential investors, and 50% are planning to dedicate more time to roadshow activity
- 61% are planning to upgrade their IR websites and 47% their results presentations
- 32% of companies that are changing their budget this year plan to allocate more funds to company-hosted events such as capital markets days
These plans reflect the shifting dynamics within capital markets, at a time when 62% of companies are noting an increase in direct requests for meetings from investors and 47% in buy-side research on their company.
In addition to regulatory changes, IR strategies are increasingly being shaped by a combination of growing investor activism and a significant rise in passive investment strategies.
In response to growing shareholder activism, 95% of companies now regularly discuss their long-term strategy with key shareholders. In addition, companies are looking to avoid potential conflict or hostility further down the line by gaining a deeper understanding of their investors’ perceptions earlier on, as well as their proxy voting guidelines.
The significant growth in passive investment, which continues to shrink the addressable market of active investors, further increases the need for a more sophisticated approach to ownership identification and investor targeting. Our research findings show that for nearly a third of the companies surveyed, passive investors represent over 20% of the shareholder base.
This trend has additional implications for investor relations strategies. Unable to sell off poorly performing positions, passive investors have in recent years become much more assertive towards corporate boards when it comes to issues such as tenures, board diversity, meeting attendance, protection of shareholder rights and director remuneration.
Other key findings from the research include:
- When preparing for non-deal roadshows, only 44% of companies take incoming requests for meetings from investors into account and less than half contact investors ahead of meetings to establish their key areas of interest
- Whilst demand for board interaction with investors continues to rise, 38% of company chairmen and 40% of other board members do not meet with investors outside the AGM
- Despite increased focus on long-term value creation by investors and regulators worldwide, 27% of companies have no plans to publish sustainability reports or adopt an integrated reporting approach
- As IR websites become increasingly sophisticated and mobile-friendly, companies are reporting a further decline in their use of social media for IR purposes, across virtually all channels
- In terms of virtual IR events, AGMs are experiencing the fastest growth, driven by rapid adoption among North American companies particularly (21% hold virtual AGMs against 10% in 2016)
- Altering investor perceptions of their company is a key priority for 72% of small cap IROs this year but only 17% are willing to commit resources to commissioning in-depth perceptions research. At the other end of the spectrum, 45% of large cap companies regularly undertake such research and, in turn, a far smaller percentage feels misunderstood by the market
To view the full report click here.