AIM Companies and Investor Relations
A recent survey revealed that investors are looking for a more proactive approach to investor relations (IR). Himesh Chavda, solicitor, looks at how, despite the evident importance to investors, only half the companies who took part in the 'Taking AIM annual survey 2007', carried out by international law firm Faegre & Benson LLP and accountancy firm Baker Tilly, said that they had any instructions in IR as part of their IPO process.Date: 06 Aug 2007
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IR is all about communicating clearly and regularly with investors, the city and other key audiences. Although it is an essential part of a public company's role, the need for IR is an aspect of listing that is new to many AIM companies and their executives. Why is IR important and how can it be developed? Good IR can actually be of benefit to your company. REGULAR FLOW OF INFORMATION As a public limited company, your share price is dependent on information received by a wide-ranging audience including shareholders, analysts, journalists, investors, brokers, trade partners and employees. A lack of information will lead to speculation, which may impact negatively on your company's share price. "IR is all about communicating clearly and regularly with investors, the city and other key audiences."
To obtain greater control over the city's perception of your company, it is essential to send out news on your company continuously, whilst being as transparent and open as possible. Public scrutiny and regulatory pressure is part and parcel of being a plc. The 'AIM Rules for Companies' sets out minimum disclosure requirements for AIM companies. But whilst this will keep you within the legal and regulatory regime, will it help you stand out from the crowd? With more than 1,600 companies on AIM, success depends on who has excited the investors the most. There are many ways in which you can reach out to your audience and build investor relations. Below are some effective and popular methods that successful AIM companies use. WEBSITE – INVESTOR RELATIONS AIM rule 26 requires AIM companies to maintain a website setting out information on the company's business, strategy and developments. Maintaining a dedicated IR section will provide an easily accessible area to communicate key information and attract interest from investors and the press. Typical examples of what an IR section may contain include financial reports, current share price, who your company's advisers are, minutes of investor presentations, company budgets, shareholder FAQs and information on the developments in the markets that your company operates in. Additionally, rule 10 of the AIM rules requires AIM companies to retain a regulatory information service (RIS) provider through which you are required to announce, amongst other things, price-sensitive information. Consider making regulatory news service announcements available through your website as well as your RIS provider. Flexibility in obtaining sources of information on your company will help you reach out to your investors and other interested parties quicker. HIRE A PR FIRM Although your nomad and broker will advise you on your fundamental obligations during and after flotation, buying in the know-how of a good PR firm may be well worth the expense. PR is well accepted and understood in the city. A PR firm's job is to help plan a communication programme for your company and help you deal with problems or controversial issues. A good PR firm should have an excellent track record, outstanding contacts and deliver what it promises – essentially, to get your name recognised. Therefore, they will need to know your company, its strategy and its products and services inside out. It doesn't come cheap, but a good PR company should help raise your profile significantly, keep your name in the limelight and help create a buzz around your company. ROAD SHOWS Going on road shows to meet investors, brokers and the press around the country or overseas will help put your company on the map outside of your immediate location. Your target audience will always be interested in site visits, particularly if you have a facility you would like to show them. "Investing in IR can be both time consuming and expensive."
Alternatively, inviting the media, analysts and investors to your company will assist in their understanding of what you do and how you operate. Events such as the opening of new facilities, new acquisitions or the launch of a new product are the ideal opportunities to bring them in. DON'T LIMIT YOURSELF To increase your profile, it is important to build strong relationships with as wide an audience as possible. Don't limit yourself to the above mechanisms. Use your PR firm, nomad or broker to get introduced to and build relationships with journalists (both in the UK and overseas), investors, trading partners and anyone you believe will help your company grow. Investing in IR can be both time consuming and expensive. However, there is much to gain if the information on your company is easily accessible and open, and people know what your strategy is. You will also have greater control over the news that people receive, which reduces speculation. Most of the AIM companies surveyed believed that their IR efforts were fully reflected in both the city's understanding of their company and the level of interest it received. So as AIM gets bigger and more competitive, the investment you put into your IR may well help you stand taller. |
