We are proud to publish our latest white paper, written by Mark Robinson.

In the paper, Mark looks at the level of stock lending in UK PLC and how this has been rising over the past few years. It is now more important than ever for IR teams to communicate effectively with their shareholders and the wider market as a whole.

Read the white paper here.


Resident Mo Bros and employees Jack Millward and Tom O’Grady spent their November grooming their top lips to raise money for the Movember Foundation. It was like the 80s had returned to London for a whole month, and all for a great cause.

The Movember Foundation work to fight men’s health issues, primarily prostate cancer, testicular cancer, depression and suicide. Having dubbed November ‘Movember’ back in 2003, the Foundation encourages thousands of men worldwide every year to don the all-but-lost ‘tache. We are proud to have taken part in this great cause, and not for the first time.

If you would like to make a donation, please click here.

For more information on the Movember Foundation, please click here.


RD:IR was front-and-centre among the 500 or so guests at the Best Practice Awards again this year, being a Gold Sponsor of the IR Society. This year’s event was held at the De Vere Grand Connaught Rooms and was indeed grand, as the name suggests. This annual do, now in its 18th year, is always the most anticipated in the investor relations calendar, leading to attendees dressing in their finest to be entertained and socialise the night away.

We send our warmest congratulations to all winners on the night, and are especially proud to work with RDI REIT, which was named for having the best overall communication of company investment proposition, and Fidelity International, recognised for having the best investor engagement. Both companies were rightly acknowledged to have a strong IR strategy due to their commitment to their investors and the markets.

The Best Practice Awards are an important marker of the seriousness with which the IR Society takes best practice and good governance, issues which we at RD:IR view as vital for healthy capital markets. It is right to recognise those people and companies leading the field with their approaches to investor relations, and long may it continue. Thank you to everyone who contributed to such a fantastic evening, not least the hard-working team at the IR Society.

Fidelity International picking up their award for best investor engagement (L-R: Miles Jupp, Patricia LeFranc and David Enticknap)

RDI REIT picking up their award for FTSE 250 company with the best overall communication of company investment proposition (L-R: Debbie Nathan, Tish Crawford-Jones, Janine Ackerman and Miles Jupp)

British Land picking up their award for FTSE 100 company with the best overall communication of company investment proposition (L-R: Miles Jupp, David Walker, Joanna Waddingham and Alison Owers)

EasyJet picking up their award for best overall company IR (L-R: Richard Davies, Stuart Morgan and Miles Jupp)


All Things Small & Beautiful

The honeymoon is over. The invoices are finally going out from the sell-side to the buy-side for research and access. The buy-side is waking up to the new reality, and issuers are finally being made aware that MiFID II really does have a bite.

Our research tells us that there has already been an average 15% reduction in the number of investor meetings for FTSE 350 issuers in the first half of 2018 against the same period last year, with smaller companies faring worse than larger companies in terms of number of events and number of meetings. The anecdotal evidence suggests lower quality of investors being put on schedules and the return of the ‘hedge fund only’ roadshow is definitely with us.

On the sell-side, the predicted analyst ‘brain-drain’ seems as yet to be more at the bulge-bracket banks than the mid-tier brokers, with sectors being dropped on a case-by-case basis and the related folk moving to the buy-side or hedge funds.

The mid- and small-cap oriented stockbrokers are clinging on to life in some cases (though some are in robust health) but we have a crisis of over-supply that is being driven by forces outside MiFID II. As discussed in previous columns, the number of equity issuers in the UK continues to fall at what some  may see as an alarming rate, as fewer companies come to the market than drop out of the listings due to M&A or heading into administration.

Clearly, as with the asset management industry, consolidation of the sell-side is going to gather pace over coming months but those who predict the death of the sector are as mistaken as those doomsayers of 20 years ago. This is not, however, to deny the major dent in support for small-cap companies that the current scenario induces in terms of research and equity distribution.

Much has already been written about the role of independent research, especially with regard to small- and micro-cap companies, and clearly this has been a growing industry over recent years – but companies often view this research as a necessary evil. While some private investors may relish independent research, the effect on the professional investor is less clear as this is less researched. The more problematic issue is the number of funds and fund managers that will buy outside of the FTSE 350. Independent research needs to be read and acted on to make commissioning it worthwhile.

In terms of equity distribution, the same problems apply – the thresholds for investment have gone up at many small- cap funds as the appetite for risk has decreased, thus exacerbating the lack of liquidity from which many small-caps suffer, especially those with lower free floats.

The role of the broker

Many small-cap companies do not have a dedicated IR resource and so rely on their broker or brokers completely for their equity distribution in the sense of meeting new investors. In this world, ‘targeting’ means having a roadshow set up by your broker, not a thorough and in-depth piece of global market research as one would otherwise understand it. The company’s equity investor horizons are limited by the broker’s institutional investor client-list – and this limited distribution model is now even more restricted because many of those institutional clients are refusing to pay the broker the ‘concierge’ fees required under MiFID II to set up the meeting.

The broker client-list distribution model is often restricted geographically at the smaller brokers. They do not generally offer distribution to investors outside the UK. This means that growth companies may not get the maximum capital support they need because they do not have access to otherwise suitable funds in Europe or elsewhere.

Of course, many non-UK investors have constraints on investing into AIM stocks but for Main Market issuers it seems sub- optimal that they may not receive the benefit of wider relevant distribution due to the distribution model. However, it seems likely that the smaller brokers not offering more widespread distribution will not survive the market cull that MiFID II will bring, directing issuers towards the larger mid-market brokers who do offer a more global reach.


The conundrum is that the companies which are likely to fare the worst under the new rules are those least likely to have a dedicated in-house IR team – or indeed, use an external IR adviser. We are seeing a ‘trickle-down’ currently in the sense of more small-cap companies taking on an IR professional, but it is certainly not yet a flood. This is understandable – if senior management did not understand the partial nature of the equity distribution model pre-MiFID II, then they are less likely to comprehend fully what the new rules mean for their company and equity, especially if, for the moment, the world seems a lot like it was before the change.

Given the decreasing institutional interest in small-cap stocks, the next layer of capital has to be discretionary retail investors: private client stockbrokers, wealth managers, family offices, private client fund managers etc. These investors are a lot easier to reach and handle than ‘pure’ (self-directed) retail due to the collective nature of their investment, but there has been an uptick in the hurdle number to get on their stock lists over recent years. Many PCBs will now only include FTSE 350 companies on their buy-lists.

There is a strong tailwind the UK towards individuals using online execution-only platforms for their investments, eschewing the role of the investment professional to manage their money. The discretionary retail sector remains (and will remain for many years hence) a valuable source of capital for smaller companies, but keeping private non-discretionary managed investors informed of the equity story via active and ongoing media campaigns must also be part of the small-cap IR strategy.


Some commentators have provided a contrarian view to the more standard ‘doom and gloom’ scenarios for small- and micro-cap stocks. The argument is that with less sell-side coverage and with less ‘old- school’ institutional money flowing into the sector, there will be more opportunities for the nimble ‘boutique’ specialist investor to find hidden gems and make spectacular returns. Some predict a new Golden Age for small-caps in the UK market, but I wonder if this is somewhat farfetched. Certainly, there is likely to be a price uplift in this sector of the market due to the increasing scarcity value of small-cap stocks. Given that there are still over 1,700 equity issuers across the Main Market and AIM at the time of writing, the market place remains crowded and small-cap companies need to shout loud to get noticed.

Small-cap and large-cap IR practice is broadly similar in terms of basics but the upside potential for smaller companies who have not carried out systemic IR in the past can be tremendous. One merely has to get past the inured acceptance of historical market practice among some small-cap senior management to the realisation that reliance on the broker equity distribution model alone may not provide them with the optimal share price performance they may well deserve.


Richard Davies delivering the opening remarks

RD:IR’s close relationship with the IR Society came to the fore again today, with Richard Davies, Managing Director, curating and moderating a thought-provoking IR Masterclass, hosted at the offices of Instinctif Partners on Gresham Street.

Richard began with some opening remarks about the changing nature of governance, before Mark Robinson, Head of EMEA Issuer Services at RD:IR, set the scene for the morning with a review of current levels of shorting in the UK market. Mark noted that FTSE 100 stocklending seems fairly unchanged since the Brexit vote, perhaps due to the global focus of issuers in the index. In contrast, the level of stocklending in the FTSE 250 has risen over recent years and continues to rise, as the index is very domestic-focused.

We will be publishing a White Paper on stocklending over the coming weeks, with in-depth detail and analysis. Following Mark’s observations, Richard moderated a panel discussion on shorting, involving Matt Hall from Corporate Broking at Deutsche Bank, Jeriel Rivera of FMR Investment Management, and Steven East, formerly a senior sell-side analyst at Credit Suisse. A key takeaway from this discussion was that corporates should speak to those investors shorting their stock, rather than ignoring or refusing to talk to them. IROs must find out why an investor is shorting their stock: has the investor misunderstood part of the business, or do they know something the corporate doesn’t? Being transparent and communicating well to the market is always the best course of action. In addition, if an IRO avoids speaking to an investor, then that investor may begin to wonder what the company is hiding and could take a negative view.

As well as engaging with short investors, a successful approach to disarming them is for a company to publish all news, good or bad, as soon as possible. Investors tend to short stocks when they are aware of something bad beneath the surface that is being suppressed. If the company makes that news public knowledge, the chances are high that it will then be factored into the share price, meaning there is little benefit in shorting the stock. This is also simply good practice – to be honest and transparent with the market – to maintain a good relationship with investors and have a true share price that reflects the company accurately.

Following the panel discussion, the floor was handed to Victoria Sant of The Investor Forum. She discussed what her organisation does in the corporate governance space, by working with investors to help amplify their voices to the boards of the companies they are invested in. Key points highlighted by Victoria include the need for the quality of dialogue between investors and boards to be improved, especially as too much time is spent on remuneration and not enough dedicated to long-term aspects of a business – for example, culture and ethics. Essentially, a board’s focus should be on long-term value creation as much as short-term issues.

The third item of the day was a governance briefing and debate, involving David Styles of the FRC, Rupert Krefting of M&G and Charles King of Halma plc, again with Richard Davies moderating. As Director of Corporate Governance at the FRC, David Styles set the scene for the debate, reminding the audience that the new Corporate Governance Code for 2019 is in fact two-thirds shorter than the current iteration. It goes without saying that shortening this document has, of course, been widely appreciated! The new Code takes the approach of asking companies how they apply its principles in a way that shareholders can evaluate. There was also a loose promise from David that the Code will not be updated for another 18 months at least. With the current state of global affairs, whether this happens or not is anyone’s guess!

The governance briefing included the thought that asset managers need to do more to engage with the companies in which they invest. Investors are spending more and more time thinking about ESG and how the companies they invest in approach the E and S as well as the G. However, a big challenge to companies at the moment is engaging with all shareholders. This is because there are so many quant investors that only stay invested for short periods, as well as index and other passive funds that do not necessarily seek engagement.

To close the morning, Richard Davies interviewed Anita Skipper, formerly of Aviva Investors. Anita has a decorated career and has worked in the corporate governance space since 1993, meaning she is well-positioned to comment on current practice. An interesting point Anita raised was that the average holdings for an investor have decreased in time over the years. When she started out, it would have been around seven years, but now it is around one year or less. This ties in with the point about engaging with shareholders being difficult: there is a higher turnover within each company’s shareholder base these days. Having said this, Anita noted that there is an increasing amount of corporate governance departments at investors speaking with the IR departments at corporates. This is seen as a good thing, as it shows how investors are now recognising the importance that corporate governance plays in 21st century business. As a departing point, Anita said that it is no longer good enough for a CEO to cut costs of a business and increase its profits, thereby earning a bigger salary. These days, the CEO will have to explain how the cost cutting has been achieved, why the cost cutting has been needed, how the board has acted throughout the last year, and other such similar areas relating to governance of the company.

The morning was interesting and useful, with the main takeaway being that the board needs to ensure a strong communication with investors and the market.

We thank the IR Society for organising the event.

RD:IR works in the governance area with companies to assist their communication with the market, either on a one-off or retained basis. Please get in touch to discuss this further.