American investors are a huge presence for European companies — here’s how IROs from across the pond can make even more headway with the U.S. investor base.
For European IROs, maintaining a strong American investor base is essential for continued growth and success. U.S. investors are famously bullish on companies from across the pond — Anne P. Guimard, president of London and Paris-based FINEO Investor Relations went so far as to tell NIRI’s IR Update that “U.S. ownership is part of the DNA of European companies.”
According to the U.K. Office for National Statistics, North American investors hold 45.7% of the U.K.’s “rest of the world holdings,” with U.S. investment so prevalent that some U.K. companies also have American Depositary Receipt (ADR) programs established for North American investors to trade foreign shares and receive paid dividends in U.S. dollars. The U.S. Department of State reports that United States is France’s largest source of foreign direct investment (FDI stock).
What’s more, Guimard told the publication that she’s observed “increased interest” from U.S. investors in recent years, especially as European small-cap targets have become more and more attractive to the investor base. This increased foreign engagement should be cause for excitement among European IROs — U.S. shareholders can bring much to the table. Here’s what European IROs can do to become even more attractive to American investors.
Get Out There
When it comes to making contact with the right investor audiences, sometimes it pays to get off the beaten path. “The size and geography of the U.S. can be a challenge,” Robert W. Baird & Co. director of international corporate access Amy Gardner told IR Update. “Companies tend to visit New York and Boston and attend the same annual investor conferences and ultimately
see the same investors.”
Restricting the prospect pool to those cities leaves funds on the table — there are untapped markets waiting beyond the East Coast. While smaller European IROs might struggle to send representatives to the four corners of the country, some of the second-tier U.S. markets, like Atlanta, Dallas, Chicago, and Kansas City, are certainly worth a visit in lieu of the same old annual New York conference.
Know Your Audience
Once the U.S. audience is ready to be pitched, European IROs must remember that messaging for American investors should accommodate their unique sensibilities. “They are more focused on shareholder return,” Joanne Darlington, head of Investor Relations at Paris-based Eutelstat, told IR Update. “We adapt our dialogue with them to discuss our use of cash, buy-backs, and special dividends, whereas European investors take the company on trust in terms of use of cash.”
U.S. investors are also more concerned about long-term goals and projections, taking into consideration the big picture of the company rather than temporary spikes of profit or loss. It’s important that European IROs remember this, and come to the table prepared for questions and concerns they might not ever field at home. “Make sure management understands that different audiences have different priorities,” Darlington said.
Reach Them on Their Terms
European IROs especially need to take note of the different expectations U.S. shareholders have once they’ve made the decision to invest. “Overall, the U.S. investor needs clear and concise communication, responsiveness to inquiries, and a high level of transparency,” said Gardner. This transparency comes to the forefront on several levels, from the frequency of reporting to the level of information available on company websites. Taking steps to improve communications by streamlining reports or engaging shareholder resources like IR mobile apps and social media accounts can show U.S. investors European companies have their best interests in mind.
“European companies need to change their mindset about providing more information and giving equal access to all investors, as this is not their natural orientation,” founder of Commodore Intelligence Elizabeth Saunders told IR Update. To truly appeal to U.S. investors, then, it’s best for European IROs to take heed of the principles America purports to hold dear: individualism and equality, even in investment.
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