Dear readers,
Enbridge has enjoyed success in attracting long-term investors – and we are looking for more. We tend to find them one at a time, which isn’t easy, because Enbridge has a couple of unique investor relations challenges.
Our primary IR challenge is aligning our company’s timeline with investor horizons. This is particularly important at Enbridge because we are classic long-term investors ourselves. We have to be – we’re an energy delivery company. Our business requires large capital investment in pipelines and terminals in fixed geographic locations. Consequently, our investment horizons are measured in years or decades – not quarters, like most investors.
That’s a significant disparity, and one we attempt to bridge with a progressive IR program. We emphasize the attractiveness of a consistent and reliable total return, beginning by differentiating our fee-for-service business model from others. We explain how this philosophy and process can be repeated. We describe Enbridge’s rich dividend history and provide straightforward guidance on the pace of future dividend growth.
Our business fundamentals are also a topic for discussion – Enbridge is in the middle of the energy value chain, making upstream supply and downstream demand fundamentals critical investment considerations. Last summer we hosted an analyst tour of a key supplier’s production operations to remind and educate investors of the supply fundamentals.
We provide transparency on an asset-by-asset basis, both in quarterly news releases and in an annual supplementary document. We provide annual earnings guidance and a best estimate five-year average EPS growth rate consistent with our rolling strategic plan. In short, we strive to build confidence in the long-term sustainability and growth of our business through solid operational performance and active investor education.
Another challenge for Enbridge is differentiating our publicly traded equity securities. As an asset manager with capital-intensive, regulated investments, one of our corporate strategies is to enhance returns by financing mature assets with the lowest appropriate cost of capital. To this end, we have created two publicly traded income trusts: Enbridge Income Fund in Canada, and Enbridge Energy Partners in the US.
IR facilitates market access to these trusts, explains their strategic role and clarifies their slightly varying investment propositions. We begin by contrasting each investment thesis, directing each at a specific market segment. We target Enbridge at those favoring a balance of capital appreciation and income, and the income trust vehicles at those seeking primarily tax-preferred income.
Different investors are targeted through the use of targeting tools, attendance at investment conferences and the hosting of analyst days to highlight differing assets and growth strategies. Recently, we improved the profiling of the trusts’ strategic values by grouping them in their own reporting segment within Enbridge’s financial statements.
As a result of a corporate-wide commitment, I feel we can successfully address our IR challenges and find and satisfy long-term investors for each of our equity securities.
Sincerely,
Pat Daniel
President & CEO, Enbridge
