Investor Relations

86INVESTOR RELATIONSReadymade institutional targeting tools with data-mining techniques canbe purchased to identify investors whose investment style and criteria arecompatible with your company’s fundamentals and your free-float strategy.You will achieve positive return on investing in these tools as well ason developing your own custom database if you design a strategy to attractnew shareholders. The process might be compared to a marketing approachinvolving market studies. Below are a few ways to approach this strategy:List and make direct contact with foreign institutional investors thathave shares in the your market but not in your company.Specifically identify those that have invested in securities issued by thecompetition but not your company. The idea is that the funds in questionare interested in the issuer’s sector and may decide at some point totake advantage of differences between valuation multiples. The criteriaon which such decisions are based often include the following:Market capitalization;Free float;Sector;Business model and, within it, such factors as operating profitability,cash flow, payout ratios.To make sure that the information obtained about institutional investors isexhaustive, issuers should also assess the following: The origin of the funds under management. The institution maymanage assets for third parties such as pension funds, for instance, in itshome country as well as abroad or for its own proprietary accounts. Amounts under management. This type of approach can allowissuers to target second-tier institutions that may be of medium size but havenonnegligible investment potential. Their organizational structure. This refers to how investmentdecisions are made and whether teams are organized by economic sector orcountry. IROs should know ahead of time whether to prepare for an individualmeeting with and presentation to analysts or decision makers. The typeof questions asked will be very different depending on the organizationalstructure of the institution. The valuation and decision-making criteria. The IRO will alsowant to find out what their main sources of information are, how their