Optimizing Engagement with Offshore Investors: Effective Strategies for Success

On May 30, 2024, the Australasian Investor Relations Association (AIRA) annual conference featured a panel discussion on optimizing engagement strategies with offshore investors. The session featured insights on how to address some of the most pressing challenges faced by investor relations professionals. Nasdaq's 2024 annual IR Pulse survey recently cited "attracting capital from international markets" and "engaging generalist investors" as the top two challenges, making the panel's insights particularly timely.

Moderator

• Sean O’Sullivan, Head of Investor Relations, Endeavour Group

Panelists

• Simon Rose, Chief Executive Officer, Rose & Company
• Chris Gibbs, Head of Investor Relations, Blue Scope Steel Limited
• Neil Waldron, DipInvRel Listing Director, Australia & New Zealand, Nasdaq
• Nicole Mehalski, Head of Investor Relations, Xero Limited

Here are some key insights from their discussions:

Organizing effective non-deal roadshows has become increasingly difficult for companies. Traditionally, marketing to offshore investors was already a complex endeavor; however, with diminishing support from investment banks, this task has now become nearly impossible.

Geographical distance, market size, and limited international analyst coverage inevitably reduce visibility, leading to a lack of awareness among offshore investors.

Additionally, the evolving regulatory landscape has prompted traditional long-only investors to reduce their reliance on bank resources, further impacting traditional corporate access methods. Consequently, long-only investors are now infrequent attendees of conferences and non-deal roadshows, leaving itineraries often filled with hedge funds, who account for approximately 80% of non-banking revenue.

"The investment banks are now bifurcated. Investment bankers can be paid by a company, which is why that banker is so eager to help. However, the corporate access desk and the sales desk are only paid by investors. So the bank has two customers, and when you go on a non-deal roadshow, you're the product, not the customer."

Companies that leverage various data sets, such as fund flows and conference participation, can prioritize high-potential investors and reduce the risk of having unproductive meetings.

"Data helps reduce the risk of unoptimized roadshows. It ensures meetings with relevant investors and maximizes the use of senior executives' time."

Ongoing identification and engagement with potential investors who have a long-term investment horizon, the capacity to invest in non-US stocks, and the ability to take at least a 1% position in the company is essential for effective investor engagement. Creating consistent dialogue with these investors is key to building meaningful relationships.

Engaging professional service providers has helped companies proactively identify and engage with the right decision-makers at targeted funds.

"Moving the model to a fee-for-service approach, though hard to swallow initially, has shown green shoots. Specialized services help in identifying and engaging the right investors."

Companies should devote time to introductory meeting in virtual formats to gauge investor interest prior to committing to in-person meetings.

"We are huge proponents of an initial virtual meeting with non-US based companies to earn a meeting with the C-Suite. They have to earn the meeting. We only want to do virtual meetings for the first few months of an engagement until we know where there’s geographic interest.”

Engaging offshore investors is a long-term process that involves multiple touch points and consistent follow up to build investors’ confidence to make meaningful investments.

“You don’t take a 5% position in a company after one meeting; it's a two to three-year journey. Building a relationship requires meeting people, convincing them of your business's potential, and following up to show progress."

Regularly seeking feedback from investor meetings and refining engagement strategies based on this feedback is vital for continuous improvement.

"Challenging what you're doing and adapting based on feedback is crucial. It helps in improving disclosure and making engagement strategies more effective."

The potential return on investment from accessing larger markets and attracting significant investors is substantial. Educating the C-suite on the benefits of proactive and data-driven investor engagement is crucial. This approach not only facilitates sustainable growth and enhances market valuation but also fosters stronger, more resilient investor relationships.

For further insights, AIRA’s 2024 Annual Conference is available for on-demand viewing here: 2024 AIRA Annual Conference | On Demand