Investor Relations

6INVESTOR RELATIONSbeing a significant competitive advantage over other listed companies, andeven more so, in the case of private ones. For the latter, their past financialperformance and future prospects are not in the public domain, which maybe a cause for concern to a potential shareholder. Issue securities at any time at an attractive price. It is importantto bear in mind that a good amount of time may elapse between issues, possiblyseveral years. Even if the decision to tap the capital market is madeseveral months or weeks ahead of time, the light only turns green a few daysat best before the event. Regular Investor Relations can help lay the groundworkwell ahead of time. In Investor Relations, closing a door that wasonce open can have damaging consequences. As the saying goes, “Marketshave a long memory.” Likewise, suddenly shifting to a higher gear, for noapparent reason, can also put operators on guard. Reduce their cost of capital. It is common knowledge that qualityInvestor Relations are a direct source of value creation, notably becausethey can be instrumental in driving share prices higher, thus pushing financingcosts down. Diversify their shareholder base. Or better balance the differentcategories of shareholders (institutional and retail investors, core shareholderswho own a substantial portion of the share capital, employees andshareholders from the country of origin and from foreign countries—thenonresident shareholders). The goal here is to spread the risk more evenly,as some investors obviously have more investment power than others.Moreover, not all have the same responsiveness, and some manage theirfunds with a view to the short (in some cases very short!) term while othersare truly focused on the long term. Meanwhile, should a crisis occur, foreigninvestors, most of whom are institutional, may be prompt to sell theirholdings very quickly and repatriate the funds to their domestic markets.Some issuers are also keen to develop a shareholder base that reflects thegeographic spread of their businesses, using their revenue breakdown as amodel.1.2 THE FOUR PHASES OF INVESTORRELATIONS IN AN IPORegardless of the timing of the IPO, the quality of Investor Relations isdetermined by how rigorously and thoroughly the going-public process isgoing to be thought out and implemented.As in many life-changing events, there is a “before” and an “after.” Thisapplies to getting listed as well.