• What methods are used in targeting investors?
• What are the criteria for identifying new targets?
• How successful is targeting in gaining new investors?
• How has the role of brokers in corporate access and targeting changed for investors and IROs?
The past few years have seen changes in regulation, technology and service provision that can impact the manner and scope of how companies target new investors. This in turn may have an impact on the criteria used for selecting targets and, ultimately, the results of investor targeting programs.
This report looks at how companies approach investor targeting and whether they have experienced recent changes to that approach. We also look at what criteria are used when determining which investors to target and their geographical locations, as well as how successful the results of targeting are and how much work goes into achieving this.
The report finishes by looking at any changes investors have seen in their use of brokers for corporate access and comparing this with changes in the corporate use of brokers for investor targeting.
Findings in this report are based on results from the IR Magazine Global IR Survey conducted in Q1 2019. The results are broken down according to geographical region and company size. For the purposes of this report the regions are North America, Europe and Asia while the company market cap sizes are determined as follows:
SMALL CAP <$1 BN
MID-CAP $1 BN-$5 BN
LARGE CAP $5 BN-$30 BN
MEGA-CAP >$30 BN
Total respondents 215
More than a third of investor targets globally are directly identified by the investor relations team.
There is a net 12 percentage-point difference between the number of IROs who have seen a decrease in the use of brokers for investor targeting in the past year and those who have seen an increase.
More than half of companies globally use tech platforms to enhance their investor targeting.
Investment style is the most important factor cited by IROs in determining investor targets, followed by peer ownership.
Peer ownership and sector focus are the most important criteria for small-cap companies in targeting new investors.
Globally, 22 percent of new investment targets will end up taking a position in the company. It takes an average of between four and five meetings with targets before they take up a position.
North American companies are the most domestically focused in their targeting. A minority of investment targets for Asian companies are from within Asia.
Investors have seen a net decrease in their reliance on brokers for corporate access over the past year.
The decrease in reliance on brokers for corporate access among investors closely mirrors the decrease in reliance on brokers for targeting among IROs.
In the past year, there has been a net 12 percentage-point difference between the number of IR professionals who have seen a decrease in the use of brokers for investor targeting and those who have seen an increase. While seven in 10 have seen their reliance on brokers remain the same, 21 percent have seen a decrease – and just 9 percent an increase.
Regionally, the greatest difference is in North America where there is a 16 percentage-point difference between those who have seen a decrease in broker use and those who have seen an increase. In Asia, that difference is just 2 percentage points.
Large-cap companies have a 19 percentage-point difference, with 27 percent having seen a decrease in their reliance on brokers in the past year. The smallest difference is among small caps, with just 12 percent more seeing a decrease than an increase. No mega-cap IROs saw an increase in broker reliance for targeting in the past
Has your reliance on brokers for targeting changed this past year?
Criteria for investor targeting
Investment style is the most important criterion cited by IROs in determining investor targets. Of the eight criteria listed, it is identified as the most important by more than three in 10 IROs globally, while almost two thirds feature it in their top three. Peer ownership is the second-most important criteria in targeting new investors, followed by sector focus and type of investor. Six in 10 IROs cite peer ownership in their top three criteria, while a majority at least mention sector focus.
Which factors are most important when choosing investor targets?
Investor Targeting research report
Based on responses from more than 200 IR professionals and more than 100 members of the investment community, Investor Targeting investigates how companies in general and IR professionals in particular approach the targeting of investment, and looks at any recent developments in these programs. Data in the report is broken down by region, company market cap size and investor job title.
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