If free markets are spreading across the world, IR must also be flourishing. And where there’s IR – a notoriously lonely job – there must be IR societies. Lynge Blak, ‘full-time but unpaid’ chair of the International Investor Relations Federation (IIRF), says this umbrella organization for the world’s IR societies can help new groups get set up.
‘We have an advisory function to provide for these embryonic societies,’ he explains. ‘The National Investor Relations Institute (Niri) in the US, the UK’s Investor Relations Society (IRS) and the IR societies in Germany, Holland, France and the Nordic countries want to help, but interest is so sporadic, and it is not something we can put our finger on.’
While there’s a lot of contact with some IROs in many emerging markets, Blak says they haven’t found either the opportunity or the willingness to get together. ‘Yet IR magazine holds awards in places like South Africa and eastern Europe, which shows there are communities and some interest,’ he adds. ‘Those awards give most of the IROs a feeling of togetherness, credibility and pride in what they do. [Perhaps] we should use these occasions to suggest setting up societies. Unfortunately, we have not seen it happen that way.’
The most developed interest has been on the fringes of the EU, in eastern and central Europe, Turkey and Cyprus. Blak says there is also a lot going on in Egypt and Israel, ‘but it is very difficult to say whether either country will set up a society and join the IIRF within the next couple of years.’
Brazil
Brazil has outstanding investor relations, not least because it’s mandated by law. ‘A listed Brazilian company is obliged to disseminate the name of its IRO as the member of management legally responsible for the entire corporate relationship with the market,’ Geraldo Soares informs us. He should know – as well as being president of Instituto Brasileiro de Relações com Investidores (Ibri), he is IR superintendent for Banco Itaú and was voted best IRO at the IR Magazine Brazil Awards 2005.
Soares says his professional compatriots have had a lot to contend with in Brazil, where for years every emerging markets crisis around the globe reverberated immediately through the Bovespa. But Ibri, with over 250 members, does its best to relieve the strain. Since 2001 it has held 76 events including seminars, open webcasts, informal meetings and an annual, national conference in June.
Last year the program included Sarbanes-Oxley Section 404 requirements, the issue of sustainability as a value driver for companies and the financial implications of climate change, reaching a record number of 1,900 participants during the year. In March 2001 Ibri set up the first MBA course in IR anywhere in Latin America, and it now has 95 graduate and current students.
Another potent source of professional honing has been the exponential increase in the number of Brazilian companies with American depositary receipts (ADRs) in New York and all the consequent demands for information. In 2005, for the third year in a row, Ibri coorganized Brazil Day at the NYSE, with 28 Brazilian public companies putting their case to the international financial community.
Ibri works closely with Brazil’s professional and regulatory bodies such as the Comissão de Valores Mobiliários (CVM), Brazil’s equivalent of the SEC, and the Brazilian Association of Investment Professionals and Capital Markets Analysts (Apimec), whose offices Brazilian IROs often use for analyst and investor meetings. ‘Here an IRO can gauge what he or she is doing right and wrong based on the demands and perspectives of the public and, in so doing, reevaluate his or her strategic and tactical posture,’ says Soares.
Bulgaria
Founded in September 2005, the Bulgarian Investor Relations Society (Birs) built on the foundations of a Bulgarian investor relations directors club, set up in 2003. Of all young IR bodies, Birs seems to be the most active, not least because of the professionalism and intellect of its chair, Bogomila Hristova. She began in the profession in 1995 as ‘chief secretary, which includes the activities of corporate secretary and relations with shareholders,’ she explains. That was when Industrial Holding Bulgaria was privatized, beginning with 112,000 retail shareholders, all beneficiaries of the privatization vouchers issued by the government.
Since then Hristova has guided the IR activities of the company, whose highly professional web site, in both Bulgarian and English, shows how IR culture has penetrated this country. However, Hristova herself details how strenuously she has had to work to persuade management in her wide-ranging conglomerate that transparency and rapid information sharing is essential – no easy task in a society where half a century of communist rule had made almost any detail of business a state secret.
With equity markets still in their infancy in Bulgaria, regulations and practices have continually changed as the government and industry strive for the right balance. That has meant headaches for the members of the society, compounded by the need to harmonize laws in advance of EU membership.
The society’s 22 members – six men and 16 women – assemble regularly in ‘meetings, seminars and presentations for education and discussions related to legislation and development of the capital market,’ Hristova says. The society also invites foreign lecturers, usually IR professionals, to speak.
Although Bulgarian law mandated an IRO position in 2002, it is still an uphill struggle to explain the profession to ordinary Bulgarians. On the other hand, Hristova and the society’s members are very conscious and proud of Bulgaria’s ancient history – and equally conscious that few foreigners know about it. They see a major part of their task in professionalizing IR so that investors – domestic and foreign – will find investing in their country safe and attractive.
South Africa
If any emerging market justifies an IR organization, it’s South Africa, where ten years of democracy have quickly built a thriving capital market. But, as Nick Williams of College Hill reports, there is still no actual investor relations society, despite several attempts.
‘There are some companies with world-class IR departments and really professional people working in them,’ Williams says. ‘And then there are other companies that do not necessarily apply high standards and do not put the effort into investor relations.’
There is good news, however. Under apartheid, ‘IR was an all-white occupation,’ Williams points out. ‘There is now understandable pressure to redress the balance, and increasing numbers of formerly excluded groups are entering the industry, although they haven’t really made their way through to the senior ranks.’
While this changing South African IR community has not yet got together in a clubbable way, one feels sure it must soon follow in the footsteps of colleagues in Brazil, Bulgaria and Thailand. After all, can there be IR life without a society?
Thailand
Hamish Bell set up the Investor Relations Association (Asia) in 2002 to help boost professional standards. Last year he returned to banking in his home country of New Zealand, but he still watches the scene. He sums up the state of Asian IR with the response given by a Singaporean CEO confronted by a report of shareholders complaining about a lack of communication: ‘We send them the annual report once a year. What more do they want?’
Bell suggests that the lack of development in societies around Asia is because ‘internationally listed companies have tended to take on experienced IROs with links to the profession in the US and Britain, and they haven’t felt the need for local mentoring and support.’
Apart from the Australasian Investor Relations Association (Aira), local societies in the Asia-Pacific region all seem to be small and relatively quiescent. However, there is the Thai Investor Relations Club (Tirc), which set up shop in September 2001. The club is run by the Stock Exchange of Thailand (Set). Pannaveadee Ladawan and Siriluck Watewai from Set explain that Tirc has 189 individuals and 87 listed companies as members. The officers are all on staff at Set while Tirc’s 15 directors all come from Set-listed companies.
Tirc members have a monthly meeting with dinner and discussion on hot IR topics, most recently on roadshows. The club also hosts seminars and training courses and helps members with domestic as well as foreign IR. Another goal is to inform the general public about investor relations and what IROs actually do. Ladawan and Watewai admit that IR in Thailand ‘is at an early stage, being introduced to investors and the general public.’ Currently the bigger listed companies – including most Set 100 companies – have IR departments, while mid-cap companies are just starting to set them up.
Although the rest of the investor relations world seems hardly to have noticed the Thais’ hard work, the Thais themselves are most certainly plugged in. For example, the Tirc web site, www.thaiirclub.com, features articles from IR magazine and other foreign media, and the society is actively considering joining the IIRF.
