63% of listed companies plan to change their equity story this year

14 March 2023

63% of companies say they will change their equity story this year and will need to update it much more frequently in the volatile environment going forward. Good management and generous dividends are seen as the preferred levers, and therefore a large part of the corporate narratives will focus on these two issues. This is what emerges from the report ‘In search of Investor Interest: Keys for uncertainty times‘, prepared by LLYC in collaboration with Círculo CFOs. For this purpose, more than fifty senior executives -CFOs and heads of Investor Relations- of listed companies in Spain, Portugal and Latin America were surveyed.

“Listed companies in Iberia and Latin America assume that another year of uncertainty awaits them in 2023. First there was the pandemic and now the context derived from the war in Ukraine.  They are living in a counter-stylistic scenario in which keeping investors’ attention has become a challenge. For many CFOs and Investor Relations managers, defining very well and updating the company’s corporate story almost in real time will become, throughout this year, the master formula to reawaken investor interest,” says Luis Guerricagoitia, Senior Director of Financial Communications at LLYC.

Investors’ concerns

Rising costs due to inflation (36%), the impact of rising rates on borrowing (22%), concerns about the industry (21%) and the viability of the business (13%) are the biggest concerns that investors are bringing to the attention of CFOs and investor relations departments, according to the survey. Against this backdrop, investors have become more conservative, as if the behavioral patterns of more institutional funds and large insurers now prevail. In this respect, the solidity and recurrence of income and the quality of the rating have come to be seen as decisive arguments for attracting investors. 

Liquidity is currently one of the biggest problems facing listed companies. And although at first glance it may seem that this problem only affects smaller companies, mid-market companies are also seeing how the drought is plaguing trading sessions. Regarding specific strategies to mitigate this situation, a large number of respondents chose liquidity contracts, although they seem to be of little use in the face of legal restrictions on trading, with some opting for buyback programs. However, more and more companies are focusing their efforts on reaching retail investors, for which it is necessary to have communication strategies to attract and retain them.

In relation to ESG aspects, it is confirmed that these are increasingly high on the agenda of investors. Up to 81% of executives say that over the past year, the number of questions received by investors about the company’s ESG performance has increased.

Another of the survey’s conclusions is that in the current context, contacts with the markets have intensified: more than 44% of companies have stepped up their Investor Relations activity.

In the search to attract investor interest, there is a growing (although still limited) number of companies looking for technological solutions to find more effective formats and approaches to attract investors. Nearly 40% of companies have already made use of platforms that allow them to identify and make contact with new investors. On the other hand, the so-called road shows continue to be the classic among the sector classics. Eighty-five percent of those surveyed say they organize them as usual. Seven out of ten organized one in 2022, and 31% of them organized five or more successive events in those twelve months. In a new development, three out of ten roadshows are now organized digitally.

Read the full study by clicking here.

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