While investor relations has been in existence since time immemorial, and continues to involve the building of ties between companies and private and institutional investors, these are changing times. Or rather, times have changed significantly enough that traditional IR practices only represent part of the solution in addressing the needs of companies, whether they are seeking to attract investors, begin their IPO journey or achieve whatever strategies they have developed.

With the world getting ever smaller due to advancements in technology, even time zones no longer matter. Investors are able to keep a closer eye on their investments, aided by computer software that provides monitoring 24/7.

As for companies starting their IPO communications exercises, while they previously had quite a bit of leeway in controlling what facts to deliver, nowadays many facts and information can readily be found via the Internet, hence the communication process of today is more concerned with clearing misunderstandings and guiding the direction of discussions. You would be hard-pressed to find uninformed potential investors anymore.

Still, in introducing a company to the market, whether name brand or unknown, focus remains on devising and disseminating key messages regarding the said company and its business model rather than on products, which would only blur the messages or worse yet, lead to information overload. As IR professionals, we are the ideal message makers. Since we possess an unbiased viewpoint, i.e. not burdened by bureaucracy and conflicting demands, we can not only determine what are the relevant messages and who they should be targeted towards, but we can also contribute to the devising of strategies that assist companies in achieving their goals.

That said, we cannot forget that ultimately what we are responsible for, when such responsibility pertains to an IPO, is selling the company’s shares. Though business performance matters, we should not be tempted or be distracted by the desire to deliver information that would not help investors make an informed and favourable decision on such shares.

Big picture

Also, we must be able to look at the big picture on behalf of the client. Sometimes when an IPO is only targeted towards one market, and products are not sold outside its borders, an international roadshow should nonetheless be conducted as this would facilitate the establishment of a diverse shareholder base as well as possibly pave the way for selling products globally in the future, once they are known internationally by the investment communities.

Some of the most active ecommerce/trading companies in China have followed this route, with users initially found only within the country, but by going global, went on to successfully attract users from around the world. Once again, IR agencies played essential roles on such occasions, spreading messages to audiences from city to city and country to country.

For us, we have always valued a highly tailored approach in respect of creating or deploying key messages. After all, IR professionals are not only communications experts, they are also professionals in related practices, such as accounting, law and stock broking, as well as possessing in-depth knowledge of many of the industries in which their clients operate.

In addition, the combining of forces among regional offices, all working together on one large deal, is increasingly important. It’s worth noting that sponsors sometimes also rely on local IR experts to provide market intelligence and connections to complement their own investor portfolio.

Addressing possible imbalances

Of course going out and pressing the flesh can only get you so far. In this age of the Internet and the proliferation of social networking sites, conducting investor relations online has become part and parcel of investor communications. Given that the reputation and influence of a company can be impacted by those behind the keyboard, internet-related PR/marketing, including forum marketing, social network marketing and blog marketing are among the means by which companies can address possible imbalances brought by biases held by online influencers, brand evangelists and detractors.

Naturally, different investors have different preferences for communications platforms. In China, where social communications is unlike other parts of the world, the country has witnessed a rise in number of powerful platforms that companies can own and use to disseminate information to targeted audiences. These exclusive and close to real-time platforms can on the one hand accelerate information flow, but on the other hand create unfair advantages.

The increase in number of social/digital platforms has also forced companies to closely monitor the social media realm, as sharing comments in these environments may have a significant impact on share price performance, leading to unnecessary fluctuations that weaken investors’ confidence as well as bring great losses.

While various market regulators are tightening the rules and regulations of their markets, including obtaining more information on individual investors, regulations governing other market stakeholders such as the media, commentators and people who choose to disseminate information on the Internet are still lagging behind. We as IR professionals have to constantly deal with misleading statements or false information that can inflict damage on companies.

Projecting investment trends

The positive side of such development is big data. By using data analytics, we are able to analyse and project investment trends, leading to the development of more effective programmes that suit the needs of investors, and by good planning and matching, avoid fluctuations and enhance valuations.

Currently, such technology and knowledge are used more in the consumer marketing programmes. IR professionals should consider investing more in this area.

Having completed some 380 IPO communication campaigns over the past two decades, we are vividly aware that investor relations is a constantly evolving discipline that is underpinned by effective communications. As the means of communication are now rapidly changing, it stands to reason that reaching out to investors must take into account the vast array of channels presently available and making use of those that are the most effective.

While investor presentations, stock commentator meetings, media luncheons, international roadshows and other traditional tools will continue to have their place, so too will the need for digital communications and its growing plethora of services. The shrewd deployment of tools past and present will no doubt be the determinant of an effective investor relations campaign, and indeed an effective investor relations agency.