Over the past few months, Rose & Company has travelled the world to attend investor relations conferences in Australia (AIRA), Canada (CIRI), the U.S. (NIRI), and the U.K. (IR Society). During our travels, we repeatedly hear from IROs that the most significant opportunity to improve valuation lies in expanding their shareholder bases beyond domestic markets.
Swiss companies, with their strong international business operations, are uniquely positioned to benefit from this. As these companies expand their multinational sales, there is significant potential for their shareholder base to more closely align with their global business presence and regional revenue centers. Globalizing the shareholder base can lead to numerous benefits, including improved valuation, increased liquidity, and enhanced stability. Engaging international investors can lead to healthy competition among shareholders, resulting in higher valuation. Especially for multinational companies, having a well-priced equity is crucial for making acquisitions and preventing activist investors.
The U.S. presents a tremendous opportunity for Swiss companies, as it accounts for 65% of institutional equity assets. Recent successes in the market indicate remarkable valuation gains and increased liquidity from moving listings to the U.S. It is unsurprising that the question of whether to list in one's home market or abroad has become a hot topic among boards and C-suites.
The primary reason Swiss companies have found it increasingly difficult to engage with high-quality investors around the world is that the traditional bank channel is no longer effective. Sell-side corporate access desks generally focus on a limited group of institutions that generate approximately 80% of their revenue, namely high-turnover hedge funds. Long-only investors have also reduced reliance on bank resources due to MiFID II and ongoing fee compression. This dynamic presents little incentive for banks to identify new suitable long-term investors. Non-deal roadshow meetings are offered and allocated to their best clients rather than the best shareholders for the company.
We recently backtested meeting history for 100 companies of various sizes, industries, and jurisdictions and found that 70% of bank-sponsored meetings were held with high-turnover funds.
Source: Data from a sample set of 100 Rose & Company corporate clients
S&P’s 2023 Benchmarking Analysis Report(1) supports these findings, indicating that among 70+ issuers across various sectors and market caps, 76% had a fast-money investor as their most frequently engaged firm. Engaging with high-turnover funds is inefficient, as these short-term investors lack long-term commitment, making it a poor investment of companies’ resources and time.
Being successful in identifying and engaging with long-term investors largely depends on the IRO. While challenging, the task is certainly achievable. We have learned from working with numerous Swiss companies, the key to accessing North America is developing an efficient investor engagement program by identifying and building relationships with investors who have long holding periods, as they provide stability and align better with long-term corporate goals.
Enhancing Investor Engagement Through Curated NDRs
By partnering with Rose & Company, companies benefit from a sector-agnostic approach that broadens their investor audience, providing exposure to generalist portfolio managers and uncovering lesser-known specialist investment managers.
Our strict set of criteria ensures high-quality interactions
- Long-term investment horizon
- Ability to take 1% of position in company
- Ownership of similar stocks in terms of market cap, trading, liquidity, and exchange
- Participation of senior investors at meetings
Our analysis shows that meetings organized by Rose & Co. average an annual portfolio turnover of just 35%, significantly lower than the 91% seen with traditional corporate access channels. This low turnover rate helps reduce stock price volatility and better aligns with long-term corporate goals, fostering a more resilient and supportive shareholder base.
Source: Data from a sample set of 100 Rose & Company corporate clients
Proven 4-step process to shareholder building
- Qualification:We deploy our proprietary process to qualify investors whose investment criteria align with your company's value proposition.
- Outreach: We conduct direct outreach to a curated selection of investors and arrange meetings with decision-makers. We find it very effective for the IRO to conduct initial meetings via virtual calls to build a critical mass of interest in specific geographies before planning a trip.
- Feedback: We gather and leverage investor feedback to continually refine your messaging and tier investors for follow up.
- Follow-Through: We establish a marketing pipeline to maintain dialogue and engagement from initial interest to shareholder conversion.
To learn more about our service offerings and explore how our expertise can be leveraged to drive valuation, please contact shawna.giust@roseandco.com
Join us on October 1st for an insightful panel discussion hosted by IR club Schweiz, in collaboration with Rose & Company and S&P Global Issuer Solutions. Panelists will share insights into what drives effective investor outreach, along with best practices for working with advisors or reaching out directly to the buy-side. Click here to register and learn more.
Rose & Company is a leading independent capital markets advisory firm offering strategic counsel and tailored solutions to help companies increase market valuation. Serving a broad range of companies across industries and geographies, we employ a forward-thinking approach to investor engagement and acquisition, leveraging our significant experience and our broad relationships within the investment community. We align our interests with those of our client and focus on creating long-term value by identifying, engaging, and building relationships with high-quality, long-term investors.
(1) Source S&P “2023 Benchmarking Analysis Report.” 2024.
