Raising equity to fund growth, whether organically, through acquisition or both, has always been a key reason for floating and remaining in the public domain, so a good relationship with equity providers has always been a high priority among responsible corporate leaders. With the collapse in bank lending that has occurred since 2008, that bond can mean the difference between life and death for a quoted company. This applies to micro-caps, mid-caps and FTSE-100 constituents alike.
We have been reviewing the results of the first QCA investor relations survey, carried out over February to March 2011. The study has yielded some intriguing results.
Firstly, one should note the importance of smaller companies, quoted and private, to the UK economy.
Britain’s 1.2 million SMEs employ some 10 million people – about 60 percent of private sector employment. The survey of our corporate members elicited 50 responses, providing a unique insight into the board room thinking of companies in this crucial sector.
There is no question that investor relations (IR) is moving up the agenda for plcs – 57 percent of those surveyed said they increased their IR activities over the last year; almost half said they had introduced new IR activities. Allocation of responsibility for investor relations shows the importance with which the activity is viewed, with the CEO, FD and chairman being primarily responsible.
Questioned on effective tactics, nine respondents in 10 considered face-to-face meetings important, while two out of five valued an active public relations programme, with about the same proportion favouring corporate activity such as roadshows, trade fairs and industry conferences.
More than one in three emphasised the need for regular contact with their corporate broker and nominated adviser in the case of AIM companies, while a similar proportion underlined the role of an up-to-date website in securing shareholder support.
One notable factor from the responses was the increased focus on private-client stockbrokers and retail investors.
At the Quoted Companies Alliance we have always emphasised effective IR so we are encouraged by the response of our members. This goes back to the theme “Creating a Quality Dialogue”, the report by a working group chaired by Paul Myners in the late 1990s, on which I was an observer.
Virtually all the issues and recommendations still stand, that is, the more effort you make with investors, the more interest you get back. What you put in is what you get out.
Tim Ward is chief executive of the Quoted Companies Alliance (QCA), the membership organisation of the small and mid-cap quoted sector. His past roles have included head of issuer services and head of marketing at the London Stock Exchange and finance director at FTSE, the index company.
Download our Whitepapers