Tactics in taking the direct approach
For the past few years, direct engagement between investor relations teams and fund managers has been steadily gaining momentum, but only recently have IR professionals become savvy about engaging directly in effective and innovative ways.
Increasingly, direct engagement has become a two-way process. Not only are IR professionals targeting and contacting prospective investors, but hosts of investors are also eliminating the middleman and reaching out to companies directly. Not even the dreaded cold call is off the table when it comes to broadening the shareholder base these days.
‘We came from full reliance on brokers, where they were organizing all the meetings,’ says Verena Nicolaus-Kronenberg, head of IR at E.ON, an electric utility based in Essen, Germany. As more investors began directly approaching E.ON, her tactics shifted.
Her IR team now designs and spearheads several roadshows a year. And even when roadshows are organized by brokers, Nicolaus-Kronenberg is far more proactive, contributing her own target list of investors. ‘If an investor doesn’t have a relationship with the broker, we set up a private meeting,’ she says.
Direct engagement often seems like an easier path for large-cap companies or those with sizable IR teams. Nicolaus-Kronenberg, who oversees an IR team of 10, has the bandwidth to target and approach investors in novel ways. For smaller companies, though, there can be extremely compelling arguments for experimenting with direct engagement.
‘As a small-cap company, we aren’t a household name like Shopify or Amazon,’ explains Kim MacEachern, an IR professional who until last August was director of IR for DIRTT Environmental Solutions, based in Calgary, Canada. ‘Often our challenge is getting someone to take the time to pay attention to our story.’
As IRO at DIRTT for nearly six years, MacEachern had recently started compiling lists of 25-50 prospective investors and asking her sell-side sales desk connections whether they had relationships with any of those named.
Describing this approach as more proactive, she says: ‘There should always be communication happening with the Street. As an IRO, you want to take control of making sure that communication is ongoing at all times.’
In the following pages are nine tips that IROs in North America, Europe and Asia-Pacific are using to further direct engagement.
Often our challenge is getting someone to take the time to pay attention to our story
