The Value of IR in a Virtual World

We recently attended a Mexico-focused webinar hosted by INARI and NIRI on The Value of IR in a Virtual World. A panel made up of two highly experienced Mexico IR professionals – Juan Fonseca (long-term IRO and Finance Director at FEMSA) and Enrique Gonzalez (IRO and Finance Director at Genomma Lab) discussed the key lessons learned since the pandemic began, forcing most IR work to become fully virtual, and how a company can measure the value of its IR department.

Here are the key takeaways from the discussion: 

1. Every company has intrinsic value; normally there is a gap between the market valuation and the fair value of a company, and the job of an IR department is to close it.  IR departments should consider themselves not only an information channel from the company to the market but also an internal channel that communicates within. The IR department is both the face of a company and also its eyes and ears.
2. Traditionally the performance of the department was linked to the share price; this is a misconception as various factors have an impact on a share price. A more accurate measure could be delivered by market perception studies, which Miranda IR can help with. Other ways to quantify the performance of your IR department include counting the number of conferences attended, the number of conferences spoken at, measuring the results of investor targeting and measuring sell-side coverage. At Miranda IR we can help by proposing conferences to attend and speak at and by carrying out buy- and sell-side targeting to increase investment and coverage.
3. As calls with investors migrated to fully virtual, many advantages were discovered: once regional events have turned international as a person from Latin America can easily join an Investor Day held in New York City or London, and vice versa. This hopefully will not change when the world returns to normal.
4. Companies must adapt and think about how they will communicate their strategy, identity and results in a virtual world. Consider whether the message is being sent via the appropriate medium. Miranda IR can help you to identify the most effective methods and distribution channels for the message you want to communicate and the audience you want to reach. Without a doubt video (on calls for example) is now indispensable.
5. In-person meetings can take a lot of time as they involve transportation from one place to another and tend to be very strict in schedule; whilst meetings over Zoom or other platforms tend to be more time-efficient and flexible. Take advantage of the new ways of working where appropriate, including the use of multimedia such as for virtual site visits.
6. Keep C-level executives in the loop as virtual has forced the contact to be less personal. What could be discussed over a simple visit to the CEO’s office, can turn into many attempts to reach him/her over the phone or email.
7. The best way for an IR department to add value is through information and networking. You are in a privileged position within the company – take advantage of this by keeping close and clear communication with all the other departments.
8. Including ESG criteria has been a challenge as the market demands more metrics, strategies, and information from companies. It is a matter that must be addressed in the short term by identifying KPIs, indexes, and materials worthy of sharing with the market, and then holding yourself accountable in the short term. Engage with ESG specialists such as Miranda ESG.
9. The IRO needs to act as an advisor to the management team. If you are close to the decision-making process and the market knows this, then they will trust you and start to feel comfortable talking to you rather than always asking for the CEO. One panelist mentioned that IROs are so close to the release of information to the market that they always know what is public and what is yet to be released, meaning that they can talk confidently about public information and ensure non-public information is not disclosed. He mentioned that if a CEO is unsure of what is public and what is not, they are over cautious, resulting in an uninteresting conversation with little value added.

As we slowly return to normal, virtual Investor Relations will remain a fundamental aspect for any company. To maximize the opportunities that hybrid models offer and minimize the risks they bring, the strategy for the department must be clear and technology oriented.

Investor Relations is all about communication, so be sure to address what the market is asking for. Also, try to stay up to date on what your peers are signaling and communicating, that way you can keep up the pace and satisfy investors’ needs.

Miranda IR is here to help with any of the points mentioned above, to continue driving the value of IR teams in the current virtual world and the hybrid world to come.

Sources:

NIRI Webinar