Corporates engage more with hedge funds, SWFs
Companies worldwide are adapting their investor relations strategies to enhance their outreach to hedge funds and sovereign wealth funds, according to an annual survey conducted by BNY Mellon.
In another key finding, the study reports that 22% of respondents are contemplating a secondary stock listing to attract investors in high growth markets, most notably China and Hong Kong.
Developed as a benchmarking tool for BNY Mellon’s depositary receipt clients, the survey, Global Trends in Investor Relations, looks at how publicly traded companies are managing their IR practices – from guidance and disclosure policies to sell-side approaches and growing interest in social media tools.
The survey was conducted during July and August 2010 and features input from nearly 400 companies across 47 countries. Respondents run the gamut of market cap, region and industry, including financials, technology, industrials, consumer staples and energy.
“We’re seeing companies truly act more globally to raise their IR profile, from the time spent with hedge funds and sovereign wealth funds to the burgeoning use of secondary listings that target regional high growth markets,” said Michael Cole-Fontayn, chief executive officer of BNY Mellon’s Depositary Receipts business.
“IR officers are making a commitment to give fair and equal access to all investors, no matter who or where they are, to make sure they have the best information about their company.”
Key findings of the survey include:
• 93% of all companies meet with hedge funds, versus 89% in 2009; 24% of a firm’s investor meetings are with hedge funds, up from 16% in 2009. The reasons why some firms do not meet with hedge funds include lack of information on a fund’s strategy and shorting risk
• 47% of all companies meet with sovereign wealth funds and an additional 23% are considering meeting with them. Western European companies are the most likely to meet (56%) or consider meeting (44%) with SWFs. North American firms are least likely to engage sovereign wealth funds, in fact more than half have no plans to meet with them
• Nearly a quarter (22%) of companies are considering a secondary listing in an emerging market, outside their home market. Among these firms, the large majority (70%) identified a listing in China or Hong Kong of strategic interest
• Social responsibility reporting is most common in Western Europe (77% of companies issue SRI/CSR reports) and Latin America (72%), in contrast to firms in Asia-Pacific (36%) and North America (29%)
• Only 9% of companies use social media to communicate with investors, but 35% are looking for more information on its potential uses. Of those that do use social media, Twitter is the preferred medium, followed by corporate blogs
• 82% of companies provide financial guidance, especially those in Western Europe (89%) and North America (86%). 70% of firms in the BRIC countries offer such guidance, compared to 82% of companies in non-BRIC emerging markets
• Over the next three years, North America (77%) and Europe (70%) will continue to be the major regions of focus for growth of investor opportunities, followed by Asia (48%)
“With the continued globalization of the equity markets, it is of growing strategic importance for companies to benchmark their investor relations activities against their global peers,” said Guy Gresham, New York head of the Global IR Advisory Team in BNY Mellon’s Depositary Receipts group. “Our investor relations specialists work with clients to apply appropriate survey findings to support their efforts in targeting new pools of investment.”
This is the sixth annual investor relations survey conducted by BNY Mellon’s DR team. The full report is available online at www.bnymellon.com/dr