A recent survey of how companies approach and manage investor roadshows contains some fascinating insights, and some concrete lessons for GCC companies and their IR practitioners.
“IR Magazine” surveyed 750 companies from Europe, Asia and North America about how they plan, manage, and execute their Investor Roadshows. Respondents came from a wide range of sectors, representing companies from “mega-caps” with a market value of over $30 billion, to small caps valued at under $1 billion. And while the MENA region was not represented in the survey, the conclusions of the survey are highly relevant.
Globally, 91% of companies undertake an average of seven or more roadshows per year, with executives devoting 16 days or more to them. And a large proportion of respondents anticipate doing more in 2018.
Here is the first lesson: if you are not undertaking roadshows, or if your commitment to them is less than around 8-10% of the working year, then your company is falling below best practice levels.
In terms of who represents the company on roadshows, overall 36% are led by the CEO. Among small caps, this rises to 56%.
Here is lesson two: is the senior team talking to investors? How often? How is this process managed? What is the breakdown of C-Suite involvement in roadshows? And if the CEO is not leading the investor roadshows, you need to ask why not.
The third area of interest is the destinations for roadshows. Here in the GCC, where retail investors form a much larger proportion of market participants than institutions, it is tempting for listed companies to keep their IR activity local. If my investors live next door to the Tadawul, Boursa Kuwait or ADX, goes the logic, why should I travel to New York, London or Frankfurt?
The answer, of course, is that the make up of the regional investor base is changing rapidly, and the trend towards international institutional shareholders is now firmly established. This is an investor base that cannot be ignored by regional issuers, and one that requires a very different level and approach to investor relations. It is worth looking closer at the cities that American, European and Asian listed companies visit on their roadshows, and asking: do we have these covered?
There are no surprises in the top five destinations for roadshows: New York, Boston, London, San Francisco and Chicago represent long-established, sophisticated, and active pools of capital.
But further down the list are some cities that may surprise: Toronto? Edinburgh? Amsterdam? Baltimore? Milan?
These cities are all in the top 20 most-visited by companies undertaking roadshows. The question to ask is: Are the investors in these cities on our radar? How well do we cover them? Do they know us? Or are they more familiar with our competitors?
The key conclusion for GCC companies from this data is this: If your existing and prospective investor base is being accurately and comprehensively covered and communicated with, then well done, and keep up the good work.
And one simple way to benchmark performance is to ask yourself these three simple questions:
Organizations and leaders of GCC companies should be able to scrutinise their track record in this regard, and compare their performance to international best practices.