IR fundamentals: An introduction to investor concentrating on

Profitable IR entails being a grasp matchmaker. IR groups have to determine and interact with traders that is perhaps a superb match for his or her firm’s shareholder base. More often than not, which means looking for out long-term, lively traders that share the imaginative and prescient of administration. However it will possibly additionally discuss with different objectives, reminiscent of including retail traders to spice up liquidity.

The advantages of efficient investor concentrating on are manifold. It helps firms keep a shareholder base that fits their present and future profile. It helps keep away from dangers within the share register, reminiscent of an excessive amount of quick cash or extreme focus. It ensures administration time is allotted to crucial investor conferences. 

Camilla Bartosiewicz, chief communications officer at Altus Group, a market intelligence supplier for the business actual property business, is an award-winning IR skilled with greater than 15 years’ expertise. Bartosiewicz says the primary place to begin with investor concentrating on is to determine the almost definitely consumers – which regularly means taking a look at your present shareholder base.  

‘I begin by analyzing whether or not my shareholder combine is the correct one for the corporate – for proper now in addition to the subsequent stage of our evolution,’ Bartosiewicz tells IR Journal. ‘Through the years, I’ve come to understand that having the correct traders that align with our company technique could be very constructive and helps us stand up to intervals of market volatility.’

Investor relations groups can discover alternatives for present shareholders to develop their place, she provides: ‘Clearly, there’s already curiosity. We have a look at who’s underweight and has the potential so as to add extra.’

Objectives and targets

The subsequent stage is setting targets and figuring out targets. Relying on the circumstances, firms might have overarching objectives for his or her shareholder base, reminiscent of including institutional traders, boosting liquidity, rising worldwide publicity or attracting ESG-focused funds. 

Altus went by a metamorphosis, shifting from its legacy skilled providers orientation to changing into a know-how firm with a progress profile. To help this variation, Bartosiewicz centered on progress and Garp-focused funds and tech traders that understood the enterprise mannequin. There was additionally a push to develop possession within the US market, the world’s deepest pool of capital. 

To determine particular targets, Bartosiewicz recommends firms have a look at a broad vary of standards. 

‘On a tactical stage, I’d begin with an evaluation of how your organization is positioned in opposition to its friends, whether or not you try this by sector or monetary profile, to attempt to perceive whether or not you’re within the candy spot of the traders you’re making an attempt to focus on,’ she feedback. ‘We additionally take into consideration which traders may influence our valuation. Different concerns embrace location, business sector allocations, peer possession and funding model.’

For a few years, Bartosiewicz has operated as an IR staff of 1. With a lean setup, she says know-how offers invaluable help. 

‘I leverage know-how for a mix of screening and matching,’ she says. ‘I couldn’t think about with the ability to do [the job] effectively with out it. Upon getting established your standards, inside minutes you’re geared up with info to construct a goal checklist.’

Advertising and marketing plan

To execute their concentrating on technique, IR groups sometimes arrange an engagement calendar, that includes key occasions reminiscent of funding conferences, outcomes bulletins, investor or analyst days and non-deal roadshows. 

Historically, the promote aspect operates as a key facilitator of conferences with investor targets, though in recent times this has been more and more supplemented by corporations and traders reaching out to one another immediately. 

‘With the transfer to digital conferences post-pandemic, there was a notable development of buy-side traders partaking immediately with firms,’ says Bartosiewicz. ‘It may be extra environment friendly to chop out the intermediary and schedule a fast name. However I keep that the promote aspect will at all times be a vital conduit to traders. The purchase aspect nonetheless relies on sell-side analysis and conferences for brand new funding concepts.’

Monitoring progress

There are numerous methods for IR groups to watch the progress of their concentrating on efforts. It may be tempting to give attention to quantitative measures, such because the variety of conferences held or conferences attended. 

Whereas that is vital to trace, skilled IROs typically have a look at softer measures to guage success, reminiscent of high quality of conferences and efficient use of administration time. 

For Altus Group, key metrics have centered on the long-term targets for the shareholder base: extra institutional funding, extra progress and Garp funds and larger penetration of the US market. 

Extra typically, Altus tracks valuation multiples and whether or not goal traders ultimately turn out to be shareholders to see whether or not time is being spent properly. The corporate additionally makes use of investor notion research to evaluate sentiment and examine whether or not the company message is resonating with new house owners. 

‘Whereas concentrating on generally is a complicated course of, the final word objective is just to search out traders which are the most effective match for your enterprise’, says Bartosiewicz. ‘It’s about reaching a keen viewers that has the very best potential to turn out to be your shareholders.’

This text initially appeared within the Fall 2022 problem of IR Journal.