IR Monitor – 3rd August 2022

This week’s news

Navigating the storm: how IR teams steer co.s through volatile markets 

As firms batten down the hatches amid a swirl of macroeconomic headwinds, IR Magazine hosted a webinar entitled ‘Navigating the storm: How IR teams use market intelligence to steer companies through volatile markets’. Featuring a panel of IR and capital markets experts, the webinar looked at how companies can better understand investor sentiment and adjust their messaging accordingly. IR teams have increasingly large volumes of public and private data to monitor, analyse and scour for good – or bad – news and staying on top of this data in volatile times means that companies can respond in a timely manner. Alongside data monitoring, the panel highlighted the importance of sustaining dialogue with top shareholders, through roadshows and quarterly or annual meetings (in person where possible). Through these meetings, IR professionals can glean knowledge which is beneficial for management, and develop good working relationships with shareholders in advance of cases where more difficult conversations might be needed (such as activism).

London’s financial markets need more reform to beat rivals

In order to keep up with rival cities in the EU and US, UK ministers must continue to reform London’s capital markets, warns Freshfields. The suggested reforms ultimately seek to make it quicker, easier and cheaper for companies to raise money in London, with a recommendation that all retail investors should be allowed to take part in all equity raisings. Speaking to the Financial Times, Mark Austin (who drew up the deregulatory reforms) noted that the UK was at risk of complacency at a time when rivals cities in the EU were fighting to become more attractive to companies and investors. In order to get ahead, the UK must become more ‘streetwise’, and take on an ‘insurgent’ mentality rather than relying on its history as a financial capital.

Rethinking the IPO: how one VC led an effort to make the IPO fairer 

In this week’s Dealbook, Andrew Ross Sorkin rethinks the IPO. Following venture capitalist Bill Gurley’s 2019 efforts to make IPOs fairer for start-ups and the average investor, changes were made to banks’ control over the process, giving rise to different transactions including SPACs and direct listings. However, 3 years later, we’ve seen some of the companies that went public via such transactions shares fall, whilst other deals were outright frauds. So, who benefited from the changes? There’s no doubt that VCs and other corporate insiders did well with direct listings but, also, average investors were able to gain access to IPOs at the same time as institutional investors, at a price set by the market. However, many of these deals didn’t build wealth – with SPACs being some of the market’s biggest losers. Sorkin argues, however, that these losses aren’t a story of the process but the business cycle.

UK dividends to defy recession this year, but not next year, says Link

Link Group registrars warn that rapid recovery of pay-outs from UK-listed companies, as the weak pound continues to offset the rising threat of recession, may offer only a temporary respite. Link caution that the outlook for distributions could worsen next year as the economy deteriorates. The pound’s slight depreciation against the US currency has boosted the value of dollar dividends, reflecting the divergence in economic prospects for the two countries – and the fact that the Fed is hiking US interest rates faster than the Bank of England to fight inflation. The currency uplift, could, however, mask a peak in mining dividends – which (alongside oil company pay-outs) have powered the post-pandemic rebound in income distribution to shareholders.

The ESG retreat continues

BlackRock warned in May that it would back fewer shareholder resolutions because many were too prescriptive – and this warning has come to fruition, details Reuters. In the 12 months to the end of June, BlackRock reported that it had supported 71 of the 321 environmental and social shareholder resolutions filed, 22% of the total. Average support across the market was a more pronounced 26%. Added to which, this is a sharp drop in comparison to the 12 months prior in which BlackRock had supported 81 of the 172 resolutions filed (or 47%). The report stated that many proposals were ‘unduly constraining on management’ whilst others were opposed because the company had already made progress on the issue at hand. On questions of board re-elections and executive pay, however, BlackRock backed 90% and 80% of votes globally.

And finally… Thursday was the ‘Day From Hell’ for investor relations. But why?

Those keeping a beady eye on the markets will have had their concentration tested on Thursday, with more than two dozen companies releasing results. Richard Fletcher (Biz Editor of the Times) let Twitter know his pet theory as to why the last Thursday of July was so heavy on results – because, come the 1st August, executives and market reporters are jetting off on holidays. Coincidence? We think not. For anyone partaking in the August exodus, we hope you enjoy the time away.

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