Capital Markets

October 8, 2018

Adapting to a post MiFIDII environment: the convergence of IR and corporate storytelling

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There will be plenty to discuss at the 2018 IR Magazine Global Forum & Awards in Amsterdam this week and a delegation from Instinctif Partners’ Investor Relations Practice is looking forward to sharing its latest insights at the Forum.

Life as an Investor Relations Officer became eminently more complicated in 2018. However, the trends exacerbated by the implementation of MiFIDII in January of this year have been a long time coming. What hasn’t changed however is that a powerful equity story still resonates, and that story needs to be told through multiple channels.

Investment Case 2

Powerful forces have been reshaping Investor Relations for at least a decade and they are symptomatic of a world that is becoming increasingly digital and automated.  These trends have been pushing issuers to rethink how they engage with investors and, ultimately, issuers are being forced to adopt a far more direct approach to their institutional marketing efforts as a result.

Why?

  1. A decrease in the volume of equity research

Issuers must do far more to stand out in the eyes of a pitch-fatigued buy-side and be able to share detailed and differentiating content rapidly with high levels of transparency and disclosure

  1. Less brokerage interest in the small / midcap universe

Smarter, more direct interaction with the buy-side is necessary to compensate for a decrease in corporate access. The need for effective and direct interaction with the investor community is paramount. IR teams are having to take more responsibility for arranging roadshows directly and partner with experienced external providers to provide additional resource where required

  1. The buy-side is margin sensitive, overstretched and time-poor.

Active buy-side investors are competing with trading algorithms that process millions of data points each second. Simple stories that stand out and can be processed in seconds is therefore prerequisite to any investment.

As an industry, Investor Relations has been slow to adopt social and digital media techniques, and this is understandable given the need to adhere to strict regulation with regards to the disclosure of information. However, if ever there was a time for the IR industry to embrace social and digital media, the time is now.

The buy-side’s appetite for a good story transcends what they can learn through a virtually identical set of peer group excel financial models and investment in a compelling story gives them an edge over their electronic competitors. This is reflected in a growing trend among investors to refer to digital sources and social media as part of their stock screening process.

This is the IR industry’s opportunity to embrace digital communications techniques, while also breaking down internal barriers as IR and Corporate Communications Departments work more closely with each other to deliver consistent and compelling content.

Our IR practice has been working hard with a number of large international equity issuers over the past 12 months to simplify their equity stories. The message is clear. The need to broaden the pool of potential capital is urgent for many issuers, which is reflected in a growing trend to simplify sector-specific stories for the benefit of generalist followers. Generalists however have limited time to digest the unfamiliar and the need to simplify stories, and speed up their learning curve, is critical.

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