In 1976, Brazil became the first country to legally require all public companies to appoint an investor relations executive. Mere compliance with the rule was no assurance of good IR, however. It was almost 20 years later, in the mid-1990s, that Brazil’s IR culture really started to develop. In 1997, Ibri (the Brazilian investor relations institute) was established, and today the organization has 270 members. In early 1998, Revista RI was launched as the first and only monthly magazine specifically targeted at Brazil’s IR community. All the while the Brazilian stock market was itself growing, now comprising 384 listed companies with a total market cap of about $600 bn.
Against this backdrop, the IR function has gone from strength to strength, and today several Brazilian companies and their IROs are known for their excellence at the international level. In recognition of these companies’ efforts, IR magazine, in association with Revista RI and Ibri, recently held the second annual IR Magazine Brazil Awards, part of IR magazine’s annual program identifying leading IR professionals and companies in more than ten regions worldwide.
As with last year’s first Brazilian IR awards, the Instituto Brasileiro de Economia da Fundação Getúlio Vargas (FGV) conducted an independent perception study among analysts, portfolio managers and individual investors to identify the best Brazilian IR professionals and companies, in both large-cap and small or mid-cap ranges, in 13 different categories.
Search for innovation
The awards ceremony was held on June 5 at the Gran Meliá Mofarrej Hotel in São Paulo, with some 250 corporate executives and market leaders in attendance. Banco Itaú, Brazil’s second-largest banking group, won the grand prix for best overall investor relations by a large-cap company, while Marcopolo, a leader in manufacturing bus bodies, won the grand prix in the small or mid-cap range.
The involvement of top management and the search for innovative solutions are two of the factors behind the success of Banco Itaú, which also won best IR by a CEO – awarded to Roberto Setúbal – and best investment community meetings. ‘One of the main goals of our IR program is the ‘interiorization’ of our meetings with analysts and investors,’ says Geraldo Soares, Banco Itaú’s IR manager and current president of Ibri. ‘In 2005 we held meetings in 13 different cities throughout Brazil, attended by more than 1,800 investment professionals,’ he adds. Another innovation is Banco Itaú’s information bulletin for individual shareholders who are not familiar with capital markets terminology; the bank also has a comprehensive web site in Portuguese, English and Spanish.
Gathering the fruits
Carlos Zignani, IR director of Marcopolo, who also won the award for best IRO at a small or mid-cap company, says his goal is to raise the level of Marcopolo’s communications with analysts and investors both in Brazil and abroad. ‘Transparency helps investors to better value their investments and, as a result, to increase the value of our shares,’ he says. ‘Our corporate governance framework allows a positive price deferential for our shares compared to other companies with a similar profile.’
Wilson Ferreira Jr, president of CPFL Energia, a major player in Brazil’s energy sector, tied with Setúbal for best IR by a CEO or CFO. He says his company ‘is gathering the fruits of a business strategy established since our incorporation as a holding company in 2002. The operational synergy between generation, commercialization and distribution led to an outstanding result in 2005, which was fully recognized by the market and reflected in our valuation.’
For oil company Petrobras, which won three awards, it’s not enough to be self-sufficient in domestic oil production or to have the largest net profit in South America. ‘The awards reflect the market’s recognition of our work in IR – our commitment to transparency both for the market and for the public in general,’ says Raul Campos, IR manager. He notes that since last year Petrobras has been rated investment-grade by Moody’s, and he hopes the company’s policy of transparency, increase in production and other operating and governance actions will help to further improve its rating.
Mining giant Companhia Vale do Rio Doce (CVRD) hit gold in the award for best corporate social responsibility in recognition of its numerous programs in education, the environment, health, culture and infrastructure. Altogether, CVRD’s socially responsible efforts benefit over 3 mn people of all ages in different regions in Brazil.
Best corporate governance went to Natura, a leader in the personal hygiene and cosmetics market. In 2004 it was listed on Bovespa’s Novo Mercado, a market segment with heightened corporate governance requirements. ‘The award confirms the care Natura devotes to corporate governance,’ says IRO Helmut Bossert.
Increasing liquidity
Most progress in IR was awarded jointly to Tractebel Energia, Brazil’s largest private power-generating company, and Grendene, the country’s largest shoe manufacturer. Not so long ago, Tractebel had low liquidity and little exposure to the market. Since last year, however, with a major secondary offering by parent Suez Energy combined with a strong new corporate governance policy and a proactive IR program, the company has substantially increased its shareholder base.
‘Tractebel joined Bovespa’s Novo Mercado, reinforcing our commitment to corporate governance and our aim of improving our investor relations and the availability of information to analysts and investors’, says Manoel Zaroni Torres, president of Tractebel. Doris Wilhelm, IRO at Grendene, says the award for most progress recognizes her company’s constant search to improve its communication channels.
For Silvio Guerra, investor relations director at Localiza, a major Brazilian car rental company, to be selected for best IR for an IPO confirms the market’s recognition of his firm’s IR efforts since it launched its shares in May 2005. ‘We had to overcome some major challenges,’ he says. ‘Localiza was a newcomer in a market where there were no other companies of the same sector. This required a comprehensive and detailed explanation of our business model.’ Guerra adds that the company’s IR efforts were clearly reflected in the valuation of its shares by the market.
Ronaldo Nogueira is editorial director of Revista RI.
