IR Monitor – 26 June 2024

In this week’s newsletter:

• The IR Society hosted an event on Digital-first IR communications strategy featuring Andrew Williams, FTI Senior Managing Director, as one of the panellists
• Elsewhere, Paris loses crown as Europe’s biggest stock market to London
• The FT reports on the club of city executives plotting a revival for the UK’s capital markets: CMIT is pushing for reform in a bid to end malaise engulfing London market
• In the US, Q2 conference season reveals continued CEO optimism despite flat IPOs and lower M&A; CEO comments during 2Q24 conference season largely mirrored those of the 1Q24 earnings calls and, if anything, were slightly more optimistic about prospects
• Caution kills the Golden Goose IPO: the flotation faced three specific headwinds (and Investor Relations Officers will be very familiar with two of them)
• And finally … UK vs Spain: British firms scoop 11 trophies at the IR Euros. But two Spanish companies took some of the most-coveted awards of the night from IR Magazine

This week’s news

Digital-first IR communications are the future – IR society webinar

Earlier this week, the IR Society hosted an event on “Digital-first IR communications strategy”, featuring FTI Senior Managing Director, Andrew Williams, as one of the panellists. Andrew reflected on joining a similar call with IROs pre-Covid and remarked on the complete sea-change in attitudes over the last few years. Resistance has been replaced with a hunger for data, a passion for LinkedIn, and an appetite for programmatic advertising… One of the key elements discussed was increasing focus on non-owned channels which are increasingly tracked and analysed by institutional investors (e.g. Glassdoor, Trustpilot) and retail investors (e.g. Reddit, Wikipedia). At FTI, our digital IR strategies look at these sites in aggregate when thinking about the ‘halo’ of sites around a company’s online reputation. Contact Andrew to find out more about how FTI can help you develop digital-first IR communications.

Make way Macron, London is again #1

It seems to be a summer for snap elections, as Emmanuel Macron has borrowed from the Sunak book of political strategy &  called a mysteriously timed general election. This has spelled bad news for the Paris Stock Exchange, from which London has now reclaimed its crown as Europe’s biggest stock market by market cap. The total value of companies listed on the UK stock market currently stands at £2.54 trillion, enough to take it back above Paris, whose stocks collectively are worth £2.49 trillion, The Times reports. The hit taken in Paris is attributed to worries over a win for a more extreme political party. The vote in France seems to be shifting, whether to the left or right, further from centre, & the market is concerned. Here in the UK, however, market analysts have commented that the political picture provides more certainty, given Labour’s wide lead in the polls.

CMIT, London’s Avengers, are here to save the UK stock market

Dame Julia Hoggett, Chief Executive of the London Stock Exchange, approached 10 top executives in the summer of 2022 with a mission: drive a radical overhaul of the UK’s capital markets, win political backing for these changes, and try to counter what the group saw as a “corrosive negativity engulfing the London market,” according to the FT. Two years later, and the Capital Markets Industry Taskforce (CMIT) is at an inflection point. With the UK election looming, Labour’s plan of encouraging private investment, in lieu of public spending, means they would have to work collaboratively with financial institutions to deliver on their promises once elected. CMIT member Katherine Braddick, group head of strategy policy at Barclays, said there is a “mutually reinforcing relationship” between capital markets and the country’s prosperity which needs to be reiterated as we approach this election. The potential political shift, coupled with CMIT’s recent win around reducing the scope of the corporate governance code – which they called “burdensome” – suggests that the team is finally starting to see the fruits of their labour. But it’s not always a happy family, according to one member. With such an ambitious reform agenda, the group often finds itself lost as to what they are actually trying to solve and where they should direct their efforts. What they say might be true: too many cooks can spoil a broth!

In Q2, US CEOs remain optimistic

While CEO sentiment expressed at investor conferences during Q2 2024 was overall upbeat, it was tempered slightly by second quarter M&A activity tracking well below the first quarter, according to FactSet. Confidence in the strength of the economy seems to be rising and companies are managing regulatory challenges well. Interestingly, despite the media’s attention on the US general elections, market participants do not seem concerned that they will impact client behaviour. And despite a drop in M&A activity, IPO activity is trending up slightly. Through early June, the level of both S-1 filings and IPO pricings was about in line with the full first quarter levels, suggesting positive (if only slightly so) momentum.

The shoe didn’t fit: How the ‘biggest IPO of the year’ failed to drop

Golden Goose, the Italian company known for its high-end sneakers, shocked the markets last week by announcing the withdrawal of its near €600 million flotation on the Milan Stock Exchange. The Financial Times attributes the failure to the “3Ms”: (Doc) Martens, midcap and Macron. Investors were not quick to forget the collapse of Doc Martens, another Permira-owned company, whose shares currently trade 80% below IPO price. It seems that Golden Goose simply wasn’t sweet enough to wash away the sour taste left by Doc Martens. The second M suggests that, as a European midcap, there is much less room for error. This listing required a near impossible level of long-only demand for a €1.75 billion market cap company, and investors seem to have shied away from such a large gamble. A third factor, out of Golden Goose and Permira’s control, was President Macron’s announcement of a snap parliamentary election, just one day after Golden Goose set its price range. Triggering a major sell-off in European equities, the announcement ultimately led to the cancelation of the IPO and poses a great question to European investors; is the market ready for the substantial number of midcap IPOs projected to come this year?

And finally … UK vs Spain: British firms scoop 11 trophies at the IR Euros 

The UK’s performance at the Euros in Germany may be lacklustre so far, but it’s best to focus on the positives – the Europe 2024 IR Magazine Awards are coming home! Despite close competition from Spain, UK companies including BAT, Rolls Royce and Topps Tiles swept up the biggest haul of the night. Spain won some of the most sought-after categories, including best overall IR at a mid-cap (Merlin Properties) and small-cap (Grenergy Renovables), but the UK dominated self-nomination awards. It took home the two newly introduced categories: best investor targeting strategy (Burberry Group) and best use of technology including AI (GSK). In all, a total of 11 different UK companies received awards. As for the second most important European competition of the summer, let’s hope Mr Southgate can keep his stakeholders equally happy…

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