In our increasingly interconnected world, globalization has altered the dynamics of nearly every industry, including the financial markets. The borders that once constrained investment opportunities are dissolving, ushering in a dynamic, global economy. However, venturing into targeting international investors requires that investor relations professionals be able to cater to unique investor behaviors and circumstances in different regions.
On June 7, 2023, Q4 and IR Magazine organized a webinar, “Internationalizing your investor base: New ways to target investors outside your region.” The webinar was moderated by IR Magazine’s Senior Reporter, Tim Human, with contributors Tish Crawford-Jones and Samantha Senna Directors of Investor Relations in Client Success for Q4. It focused on insights for companies interested in developing an effective strategy for targeting international investors.
The Significance of International Expansion in Investor Relations
Tish and Samantha kicked off the webinar by emphasizing that international targeting isn’t a one-size-fits-all solution. Before diving into global outreach, companies must consider factors such as their business cycle, global exposure, sector, and current shareholder base.
With that in mind, they remarked that European shares are becoming increasingly attractive to US investors due to their lower prices and stronger rebounds from last year’s energy crisis. International expansion has seen a surge in interest, especially since 2020. Businesses are realizing the benefits of expanding their reach to international investors, with various regulatory environments and market conditions playing a significant role in their decisions.
Samantha added that companies with pre-existing global branches of their organization might find it easier to expand their investor base. “If you already have international exposure via your operations or sales teams, that may be key to opening up the doors internationally.”
Communications Strategy for Targeting International Investors
In the context of the COVID-19 pandemic and international travel, Samantha remarked, “We’ve definitely seen more scrutiny when justifying budgets and having to have the return be justifiable when you were talking about expensing or budgeting for an international trip.” Tish highlighted the shift to remote work as an opportunity to increase productivity, adding, “There’s a lot of management teams out there that quite like the ability to get on with what they have to do, rather than having to travel everywhere.”
They underscored virtual communication’s effectiveness in fostering relations when targeting international investors. Enabling companies to establish initial connections with potential investors before an important in-person presentation or discussion can save investor relations professionals time and money. In addition, stakeholders get pre-meeting insights into the company’s strategy.
The panel discussion then pivoted to the contrasting trends concerning direct outreach and third-party engagement in different regions. They pointed out how many U.S. investors often lean towards a direct outreach with companies, as they prefer cutting through a lot of the formalities. However, they also recognized the crucial role brokers play in certain regions where brokers are essential to the process. In some circumstances, local brokers can share their intimate knowledge of regional markets, investor preferences, and regulatory nuances. Their established presence in a specific area provides invaluable insights and connections that may not be immediately accessible to those outside the region.
Best Practices for Targeting International Investors
The group then explored the importance of high-quality data whern targeting international investors. They discussed the challenges posed by inconsistencies in regulations across foreign markets, emphasizing the need for open communication with shareholders, analysts, and brokers. To better understand that region’s regulatory practices and standard practices, investor relations teams should be proactive and curious, asking relevant questions during meetings and interactions, as this approach has often led to surprising insights and beneficial results.
Samantha further stressed the importance of comprehending cultural differences when operating in foreign markets. “This is a nuance that cannot be overlooked. So researching ahead of time, becoming familiar with the cultural experience that you will have, and creating a stronger relationship with these investors is critical. For instance, what is the greeting method? Do people shake hands? Do they exchange business cards? In some cultures, the business card has a lot of value. You must hand it over and receive it using both hands.”
She also discussed the recent increase in interest towards retail investors, suggesting that it might be due to the potentially shorter investment horizon. However, she notes the complexities of pursuing a strategy that targets retail investors, especially if the business is complex or the industry is difficult for the average investor to understand.
In their concluding remarks, Tish Crawford-Jones underscored the necessity for comprehensive planning and understanding before targeting international investors. She highlighted the significance of knowing your business model, product offerings, and the distinct aspects of your target regions. She also emphasized the importance of building a robust database with the help of brokers and service providers for a successful launch.
Samantha seconded Tish’s points, emphasizing the value of leveraging all available resources in identifying potential targets. She also stressed the importance of carefully selecting the best targets to present to the management team, thus maximizing the potential return on their time investment.