IR Monitor – 18 September 2024

In this week’s newsletter:

• The biggest mistakes Investor Relations teams can make in a crisis: IROs, investors and analysts all offer their thoughts to IR Magazine
• Companies should raise funds at good rates when they can get them. But adding $450m to a $4bn hoard without detailing plans for the cash? GameStop is playing with its fans now
• Middle East IPO flurry gathers pace, reports Bloomberg
• Tokyo-listed companies have become more friendly to shareholders, but the job is only half-done. The Economist on how to finish Japan’s business revolution
• The City’s old rules were there for a reason: Alistair Osborne on London
• And finally … ‘A frivolous waste of time’: Jamie Dimon on the AGM

This week’s news

The biggest mistakes IR teams can make in a crisis – IR Magazine

During a crisis, an effective Investor Relations team is crucial and communication missteps can worsen the situation. in this article, IR Magazine tells us what the worst mistakes are and how to avoid them. IR professionals, investors & analysts all emphasise that being well-informed is key to avoiding vulnerabilities and being confident here can improve communication with the C-Suite. A head of IR concurs that one of the most common mistakes is shying away from engaging and not communicating promptly. Speed is key & communicating through the company’s channels is a must – No one wants social media to control your narrative. In fact, leveraging social media to monitor and address public sentiment can serve as a great tool to help the company strategise how to respond, says the CEO of an investment firm.  Lastly, IR should avoid restricting communication to stakeholders only, as this can backfire. Maintaining regular communication with investors before crises is crucial to build trust and encourage investment during tough times. The conclusion circles back to having more communication between IR teams and both existing & potential investors. 

GameStop is just playing with its fans 

Investors are growing impatient with GameStop as the company raised $450 million in a recent share sale without clear plans for the cash, causing a 12% drop in its stock price. In the opinion of Lex, GameStop has made little progress beyond cutting expenses and has not updated its profitability or brand leverage goals. Despite early optimism & strong investment interest following investor Ryan Cohen’s appointment as CEO, some see GameStop evolving into an investment holding company rather than a retailer. Less than complimentary comparisons to Berkshire Hathaway circulating online suggest it’s time to stop taking advantage of investor enthusiasm.

Middle East IPO flurry gathers pace

Bloomberg reports one of Oman’s largest-ever IPOs i.e. state energy company OQ planning to raise around $2 billion by selling a 25% stake in its exploration and production unit, OQEP. This move, part of Oman’s broader privatisation strategy, values OQEP at roughly $8 billion and includes a plan to offer $600 million in annual dividends through 2026, plus a performance-linked dividend. The IPO, set to launch in October, follows a recent surge of Middle East listings & is expected to fuel Oman’s capital market expansion as part of efforts to achieve emerging market status. “Our plans were tested against all the risks, including the oil prices at very low values,” CEO Al-Azkawi said in an interview. “Our debt capacity is big, so we don’t see any risk in sustaining the dividends at the moment.” Big promises for a big IPO.

Tokyo-listed companies have become more friendly to shareholders, but the job is only half-done – The Economist

Over the past decade, Japan’s corporate governance reforms have made Tokyo-listed companies more shareholder-friendly, sparking a business revolution that has led to increased mergers, investor activism, and record share buybacks with high-profile investors like Warren Buffett capitalising on undervalued Japanese stocks. However, as The Economist points out, the revolution is far from complete. Many Japanese companies still struggle with inefficient capital deployment, reflected in low valuations and vast cash reserves. Proposals to address these issues include training corporate directors in financial skills and improving investor access to company data. More challenging reforms e.g. allowing foreign acquisitions and cutting unproductive investments, are necessary but face political resistance. While the Tokyo Stock Exchange and government agencies continue to push for progress, Japan’s political leadership has deprioritised further reforms. Without renewed commitment, Japan risks losing momentum.

The City’s old rules were there for a reason: Alistair Osborne on London

London’s financial market is undergoing significant transformation as the Financial Conduct Authority (FCA) introduces new regulations aimed at making the market more attractive to investors. However, as The Times reports, the recent sale by ASOS of a 75% stake in Topshop and Topman to its largest shareholder, Anders Holch Povlsen, for £135 million—despite a higher £215.5 million bid from competitors—has raised concerns about governance. Under the new FCA rules, no shareholder vote was required, sparking criticism that the old protections, which ensured investor input, may have prevented such “cosy” deals. While the Asos deal might bring long-term benefits, the lack of a shareholder vote raises concerns that future deals could unfairly favour major shareholders. Previously, safeguards like these have ensured more transparent decision-making, as demonstrated keenly in the Hipgnosis case, where shareholders opted to reject a transaction due to potential conflicts of interest.

And finally…‘A frivolous waste of time’: Jamie Dimon on the AGM process

At the recent Council of Institutional Investors (CII) conference, JPMorgan Chairman and CEO Jamie Dimon criticised the current structure of annual shareholder meetings, calling them a ‘frivolous waste of time’ due to the overwhelming number of nonbinding proposals submitted by special interest groups. As reported in The Deal, Dimon has proposed raising the investment threshold required for shareholders to submit proposals, suggesting that only those with a more substantial financial stake should have the ability to influence corporate decisions. He also touched on key governance issues, such as the separation of the chairman and CEO roles, the dangers of short-termism, and the increasing influence of artificial intelligence in business strategy— all areas highlighting the need for thoughtful reform.

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