London Stock Exchange Group IR Masterclass 2024

The London Stock Exchange Group hosted its annual IR Masterclass conference in May this year. The IR Masterclass included several panel discussions covering current Investor Relations topics, which also saw Equitory CEO and founder, Clara Melia, join a number of senior IROs to speak on: investor targeting – the role of market intelligence and investor engagement.

The IR Masterclass started with a keynote speech from Tina Fordham, Founder and Geopolitical Strategist at Fordham Global Foresight. Tina spoke about the New Geopolitical Risk Supercycle. She noted that the biggest investor misconception is that geopolitics is about general power. Typically, the City believes that the correct pursuit of business is commercial success however, this is not what drives global leaders: they aim for power first and then money follows. Tina also noted that ultimately, geopolitics is here to stay, and we need to look at business strategy overall through a geopolitical lens. One of the biggest risk factors IR now needs to consider is the consequences of the shift in power, the signposts of that this year being: Russia and Ukraine, Israel and Hamas, China and Taiwan. This has resulted in changes in government and the regulatory environment and, because of social media, risk factors are now more interlinked than ever before.

Isabel Green (Head of IR at Rolls-Royce) and Sonya Ghobrial (Head of IR at Haleon) discussed the current issues in IR. They noted not only the significant change in the past year in the IR landscape from an economic and regulatory standpoint but also the speed of change, and so it’s more important than ever to have an IR strategy in place. Sonya and Isabel discussed the requirement of the leadership team to have a clear vision and understanding of external factors that could impact the business. The importance of ensuring alignment among all stakeholders on the company’s direction is crucial so that high-profile issues are dealt with collaboratively between the PR, governance, and communications to manage the company’s reputation effectively. They also discussed how to attract new investors, in what has been a challenging environment for many businesses, by simplifying the investment story and reporting, conducting regular roadshows, and introducing divisional management to investors and analysts. Engaging with hedge funds continues to be important as these funds can accumulate significant holdings. Interaction with the sell-side, which increasingly covers a broad universe of stocks and are often stretched, should be timely, clear, and transparent, and it’s important to nurture these relationships with informal conversations outside of the results period.

In the panel with Heads of IR from Helios Towers, Eurowag, Rivel and Orient Capital, the discussion centred on staying relevant in the global competition for capital. The consensus on the subject was that investors are incredibly short of time, so it’s imperative to keep the reasons to invest clear and the company message simple. Additionally, the speakers outlined how important it is to manage expectations and being explicit with company guidance, as this will also help narrow the range in analysts’ consensus. Portfolio Managers are looking more at managing existing holdings in their funds, although recent activity shows that the tide is turning with more activity in new investments. As regards share registers, one of the speakers pointed out that companies need to ensure that their register is aligned with the company’s strategy as opposed to amending the strategy to align with the strategy of the investors on the register. Another key point was to focus on the detail, stay on top of changes in their share register and understand who the investors are and what their specific points of interest are.

The panel discussion on Investor Targeting looked at the technology needed to target investors effectively and the vital role a solid up-to-date CRM system plays as the source for effective investor targeting. The panellists discussed that a detailed CRM system should outline which institutions the company has met, along with the key questions or statements raised during the meeting, as well as the size of their shareholding. The panellists discussed the importance of not disregarding investors who have sold out, as these investors already know the company well and should be revisited during any targeting exercise. An ongoing dialogue between the IR team and brokers is imperative to gather market intelligence and to obtain feedback from the sales teams.

In another panel discussion chaired by London Stock Exchange CEO, Julia Hoggett, the discussion focused on keeping London relevant. London the fifth largest exchange in the world, is 91% up year-on-year in total capital raised, representing four times the global average. Julia spoke about the new ‘Capital Market Industry Taskforce’, comprising of CEOs, Chairs and industry leaders from private and publicly listed companies and the advisory services that support the access to capital and investments, representing the full end-to-end ecosystem of the public and private capital markets. The Taskforce aims to maximise the impact of capital market reforms, to help ensure that the UK offers an environment for companies to establish, grow, scale and stay and to help investors access investments that provide returns and support the real economy. The taskforce has developed a ‘five fingers and one glove’ agenda comprising of:

1. Quality and usability of the primary and secondary capital raising rules in the UK.
2. Availability of high-quality sell-side research.
3. Availability of risk capital that can be dedicated to companies publicly listed in the UK and to UK private companies.
4. Corporate governance and remuneration – in the evolution of corporate governance specifically the Capital Market Industry Taskforce has made great progress through active engagement with the Financial Reporting Council on ensuring that a high standard of corporate governance and stewardship exists to help UK companies thrive.
5. Ecosystem for scaling consequential private companies

The glove is how the Capital Market Industry Taskforce communicates their role and how the IR profession engages on these topics.

In the session on Artificial Intelligence (AI) and whether it could replace the role of IR, the overall conclusion is thankfully, no, but it can make life easier. From a processing perspective, the panellists spoke about how AI can help with transcribing, taking meeting notes, managing and/or improving workflow and in some instances creating chat bots to speak with investors. Stefanie Mollin (Portfolio Manager at GiB Asset Management) spoke about the use of AI in sentiment analysis and fund segmentation, which is another way of improving workflow.

The final session was on Sustainability and ESG: Corporate action and reporting and the future of Sustainability Reporting. The panellists agreed that the sustainability reporting framework was consolidating and this in turn is driving the movement towards compliance and comparability. Double materiality is becoming more of a focus, meaning “company impact on the world and the worlds impact on the company”. Adrian Rimmer, Director of Sustainable Finance at the LSEG spoke about the key themes: Resourcing, Integration and the question of ‘Am I doing the right thing?’ There is evermore specialist expertise required and this can be a challenge for IR and the C-suite to also be able to speak on these specialist matters with conviction. Generally speaking, investors are still figuring out what they want to know and how it will affect their investment decision.

Overall, this was an insightful event that reinforced the UK’s position as Europe’s top equity capital market by some margin. For more information on the IR Masterclass or to listen to any of the sessions, you can go to: https://www.lsegissuerservices.com/spark/ucDsuc7WkLdyE6sNcyV6nt/issuer-services-ir-masterclass-2024