Untangling Mifid
You can’t get a group of European IROs together without talking about Mifid II. The far-reaching legislation, which will change the way research is paid for and could also affect corporate access services, is due for implementation on January 3, 2018. But there is a range of opinion about how much the new regime will affect investor relations.
Small and mid-cap companies are widely tipped to feel the brunt of any negative effects. The thinking is that brokers, squeezed by the new regulations, will focus their attention on larger, more lucrative issuers.
Smaller companies could end up with less research coverage and fewer brokers willing to take them on the road. Some panelists supported this view, stating that IR teams would need to think about how to take on more of the marketing and logistics traditionally organized by the sell side.
But others disagreed, pointing out that companies cannot be ignored by investment banks. ‘I don’t think things will change that much,’ said one speaker. ‘Without corporates there is no product, so brokers will need to keep servicing you.’
Crisis management
Crisis communication has often been dubbed IR on steroids – and rightly so. ‘To protect our corporate reputation, we put an ad in the Financial Times and the chairman wrote a letter to shareholders,’ explained one IRO about a recent spate of crises.
Internally, the company also fired up its processes. The investor relations team, which had a monthly report to the board in normal times, upped it to weekly, also making the C-suite more available to investors. ‘We created a WhatsApp group internally to keep in touch 24/7,’ added the IR professional.
To manage a crisis successfully, it’s best to have your support organized in advance. Brokers, financial PR and other advisers should be either on retainer or lined up for a quick switch into action, explained another IRO. At this firm, preparations include crisis simulations. ‘We have an activist subcommittee on the board with the CEO, chairman and CFO meeting once a quarter to play out scenarios on four vulnerability areas where we could be attacked,’ the IRO said.
Click here to read part one of this feature: City chatter from the IR Magazine Think Tank – Euro Leaders 2017 or the final part: (Talking) heads of IR: Lessons in targeting
This article appeared in the fall 2017 issue of IR Magazine