IR Weekly – Tuesday 26th May
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Welcome to FTI Consulting’s IR Weekly newsletter.
In this edition of the IR Weekly, we examine the largest equity-raise of the coronavirus pandemic thus far, before examining new working norms emerging during the pandemic. We then look at how the High Court threw out a request for trading data from Burford Capital, before detailing how Nasdaq is planning to tighten up listing requirements. Finally, we delve into soundbites that executives have used during earnings calls throughout the pandemic, before finishing with the story of how a chief executive compared himself to none other than Jesus Christ.
This week’s news
Compass points the way
FTSE 100 constituent Compass Group launched the largest equity-raising of the coronavirus pandemic so far. As was reported in The Times it also became the first FTSE company to include a retail investor offering on its £2bn fundraise using technology from London Stock Exchange partner PrimaryBid. Nikhil Rathi, CEO of the Exchange tweeted that he was delighted the issuer had sought to access the widest shareholder base. The Evening Standard suggested that the fundraise signified a ‘victory for the small investor’, while Compass Group noted in its launch announcement that it “recognise[d] the importance of pre-emption rights to all our shareholders and we value our retail shareholders”. At the other end of the market capitalisation spectrum, AIM quoted Tissue Regenix also made use of the technology at the end of the week successfully raising £14.6m.
The business world is set to change after the coronavirus pandemic – and not simply in a professional sense. The Times reported that almost 60% of traders and fund managers intend to work from home for between one to three days after the pandemic. The figure comes from a survey conducted by Deutsche Bank with 450 financial market professionals globally, which also indicated that just 31% of respondents said they would only work from home when needed (down from 47% when asked the same question last month). Further to this, Reuters BreakingViews reported that handshakes among professionals may become obsolete once the pandemic has ended.
High Court throws out trading data request
Investment Week reported the outcome of a legal case brought before the High Court by law financier Burford Capital. The firm sought to prove to detractors such as Muddy Waters that a 56% share price decline was the result of market manipulation. In order to do so, Burford sought to obtain trading data from the London Stock Exchange (LSE) for the relevant period, a request which was denied by the High Court. The court considered Burford’s market manipulation claims as ‘speculative’, with a lawyer representing the LSE adding that the making of disclosures such as those requested by Burford would undermine public confidence in the Financial Conduct Authority (FCA).
Trouble ahead for Chinese IPOs
Financial Times reported that Nasdaq is planning to tighten initial listing requirements. Among the new requirements put in place, the stock exchange will require companies to raise at least $25m in equity capital in their IPO or, instead, raise 25% of their market capitalisation. According to Bloomberg, the new listing requirements will make IPOs more difficult for some Chinese companies as multiple Chinese IPOs fall below the margin proposed by Nasdaq. It is said that the changes follow the Luckin Coffee accounting scandal.
Common soundbites during pandemic earning calls
Cliché alert. The New York Times DealBook reported that corporate executives have been employing some of the same phraseology during earnings calls throughout the pandemic. The findings have emerged from research analysing thousands of earnings call transcripts, with corporates tending to emphasise the “health of employees”, claim that they are “humbled” by responses to the pandemic, and that they are taking things “day by day” under advice from “local authorities”. Moreover, many calls featured reference to things “returning to normal”, at which point companies will emerge “stronger than ever”.
And finally… Softbank founder’s Jesus comparison
We continue our occasional series on how to misconduct investor relations. Masayoshi Son, founder of SoftBank, hit the headlines last week when it emerged that he compared himself to Jesus Christ. Financial Times reported that, when asked whether he felt misunderstood by the press, Mr. Son likened his predicament to that of Jesus by replying that the son of God was misunderstood and criticised too. This comes after Mr. Son has previously referenced Yoda and the Beatles during similar work engagements.
The Nice Conference 2020, Societe Generale (virtual) (27-28 May)