Q. My management team are happy to go on roadshows in London but I can’t persuade them to spend the time seeing institutions in continental Europe. Does this matter?
A.In one sense, the answer has got to be no. The amount of money under management in London (and indeed the UK) dwarfs that in continental Europe. More importantly, fund managers based in the UK tend to run portfolios that are much more heavily weighted in equities than their continental European counterparts and more open to international investment. So, wherever in the world you are based, London is an important place to focus any investor relations program.
However, your company may lose out in the future by putting aside other European countries now. Apart from the UK, Holland and Sweden, most countries have historically operated pay-as-you-go pension schemes, which, with aging populations, have become unsustainable. Therefore, governments all over Europe are actively encouraging pre-funded pension arrangements and providing substantial tax incentives for people to save for their own retirement. This is leading to markedly larger pools of assets across Europe that will continue to grow. When these funds come to invest in your sector or country they may well prefer to buy shares in companies that are already familiar.
To refuse to court European capital may be fine in the short term, but long term could prove to be very short sighted.
Q. Our investor relations consultancy have an office in Japan and keep encouraging us to think about targeting Japanese fund managers. According to Thomson Financial, there is over $2 trillion under management in Japan. Is it worth a visit?
A.There’s no doubt that there’s a lot of money under management in Japan, but most of it is yen and a lot of that is invested in the fixed income market. Japanese institutions invest relatively little in non-yen denominated equities, and a lot of those that do are tracker funds. These funds invest only in companies that are part of a major index, regardless of whether they have met the management or even understand the company. It is therefore fair to say that, in most cases, an investor relations program in Japan may involve more time, effort and cost than is readily justifiable for non-Japanese companies. I suspect that your IR consultancy may just be trying to generate additional fees from their existing client base – an admirable business objective, but not necessarily one that would benefit your company.
However, it is worth going there if you work for a largest company in the world that has Japanese shareholders, customers, suppliers or even employees.
Q. My finance director is new and hasn’t worked in a public company before. He’s undoubtedly very talented and the right man for the job, but he has a very strong regional accent that makes him difficult to understand, especially for those institutional investors whose first language is not English. Should I try and leave him behind when we next visit foreign shareholders?
A. Do you like your job? If so, and you want to keep it, I suggest that you don’t even think of leaving him behind. Instead, suggest to your CEO that a number of senior staff who have recently joined might benefit from presentation training and then include the CFO among them. That way he won’t feel picked on and you can have a quiet word with the trainer beforehand and express your reservations. You cannot hide your CFO from investors or you soon won’t have any.
E-mail questions to Heather McGregor – [email protected]. McGregor is a former IRO and investment analyst who currently works on IR assignments for Taylor:Bennett, an executive search firm specializing in communications jobs across Europe
