Tips four, five and six
For some IROs, targeting has always been an elusive practice, one that never rises to the top of a to-do list. For these individuals, now might be an opportune moment to review the principles of sound targeting.
For instance, it makes sense to research and approach investors that own your peers and don’t own you, but peers can be broadly construed. Are you looking, for instance, at ESG investors that might be drawn to your story? Deloitte projects that ESG-mandated assets will make up half of all professionally managed assets by 2024 on a global basis. (In 2022, $55 tn in assets was ESG-mandated, compared with $72 tn that was not).
Direct engagement allows you to focus on the profile of shareholder you want
More importantly, technology solutions can help IROs consider prospects however they wish. Some allow IROs to find the subset of all portfolio managers that invest in, for example, micro-caps in a particular industry, with a very specific cashflow and dividend history.
Direct engagement also opens up opportunities for aspirational targeting, knocking on doors of exactly the type of investor you’d most like to welcome onto your shareholder roster.
‘As an IRO,’ says Kim MacEachern, formerly of DIRTT Environmental Solutions, ‘you’re always looking at what type of shareholder you want to have in the company. Direct engagement allows you to focus on the profile of shareholder you want.’
When it comes to approaching potential investors, homework pays off. The more you know about the biography and background of a particular portfolio manager, the greater the likelihood of finding common ground.
Doing your homework can also help identify colleagues who already know a particular portfolio manager and can make an introduction between you.
Often, IROs find themselves working to turn cold calls into warmer ones. Anecdotally, a handful of IROs have used LinkedIn as a direct-engagement tool. One IRO is said to have picked up a few additional one-on-ones simply by posting on LinkedIn where and when he was planning to visit a certain city during an upcoming roadshow.
And when all else fails, cold calls are worth a try. Verena Nicolaus-Kronenberg of E.ON runs a large IR team and so typically meets with colleagues to decide who is best positioned to make initial calls. ‘Discuss within the team and with your brokers who has the best relationship,’ she suggests. ‘That is the approach that ends up most fruitful.’
Verena Nicolaus-Kronenberg, E.ON
What’s more, she is convinced that cold calls work best when an IR professional cites a datapoint that would make the company relevant to a particular investor. ‘You need to find a way to provide some kind of link so you have a reasonable explanation for approaching that investor,’ she says.
Finally, Jennifer Langieri of Fidelity urges IROs to keep initial outreach ‘concise’. When emailing, she recommends providing a link to the company’s most recent investor deck, making life as easy as possible for analysts and portfolio managers.
The clearer your understanding of your target, the better able you are to present aspects of your story likely to spark interest. While it’s important to prepare a universal ‘elevator pitch’, tweaking that pitch according to an investor’s specific interests is the best strategy of all.
Remember to also encourage inbound interest. IROs should ready materials, website and social media channels for direct engagement by investors. Here, the goal is to make your communications as welcoming, informative and user-friendly as possible.
