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An Understanding Of Financial Communications And Investor Relations

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This presentation is by MSLGROUP thought leader Jaideep Shergill, head of our financial communications in Asia and CEO, Hanmer MSL. …

This presentation is by MSLGROUP thought leader Jaideep Shergill, head of our financial communications in Asia and CEO, Hanmer MSL.
Hanmer MSL is one of India’s largest multi-discipline communications firms and a leader in the area of speciality communications services, including strategic public relations, financial communications, social media, events, activation and creative services. It is part of MSLGROUP, Publicis Groupe's flagship strategic communications and engagement network.
This presentation offers an in-depth understanding of financial communications and investor relations.

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  • @MimiGarrityDenman Glad you liked it.
    If you'd like to read more about financial communications, do visit our official blog Critical Conversations: http://blog.mslgroup.com/category/financial-communications/
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  • excellent overview. Thank you.
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  • 1. AN UNDERSTANDING OF FINANCIAL COMMUNICATIONS & INVESTOR RELATIONS BY JAIDEEP SHERGILL CEO & HEAD FINANCIAL COMMUNICATIONS ASIA Feb 2012©2011 06.29.2010 | P1
  • 2. INDEX  Financial Communications – An Understanding  Asia Offering  PR for Financial Firms- Listed Corporates, IPO & M&A, BFSI  Investor Relations  Your Role In Financial Communication  Case Studies©2011©2011
  • 3. FINANCIAL COMMUNICATIONS - INTRODUCTION©2011 06.29.2010 | P3
  • 4. Financial Communications – An Understanding Financial Communication PR - Financial PR – Listed PR – Financial Firms Corporates Deals Banks Corporate Earnings Equity Capital Markets Insurance Corporate Governance IPO/ FPO/Rights Mutual Funds Statutory Compliance Debt Capital Markets Non Banking Financial Disclosure Policy NCD/FCD/Bonds Companies Transaction Investor Relations Broking Firms Communications-M&A©2011
  • 5. Financial communications- Asia Offering Transaction Communications Investor Relations / Corporate Communications Disclosure and Positioning • M&A – friendly and• Integrated programs, including: contested, international and • IPOs and other listings• Media relations domestic • Complex disclosures• Thought leadership programs • Divestitures / spinoffs • Quarterly and annual reporting• Investor relations • Recapitalizations • Roadshow presentations• Internal programs • Post-acquisition / integration • Financial community• Government affairs programs intelligence • IPOs & other listings • Investor targeting Private Equity / Hedge Special Situations and Funds Corporate Governance Crisis Communications • Proxy contests • Crisis communications• Strategic positioning for • Shareholder activism • Litigation support alternative investment firms • CEO succession planning • Regulatory matters• Media relations • Board accountability • Bankruptcies / restructurings• Transaction support• Portfolio company support • Investigations • Senior Executive changes • Product recalls ©2011 ©2011 5
  • 6. PR FOR FINANCIAL FIRMS CORPORATES / IPO & M&A/ BFSI©2011 06.29.2010 | P6
  • 7. PR For Financial Firms – How It Is Different Requires in-depth understanding of the Company, its Business and the environment it operates in Differentiated Audiences require specialized information Customers are investors and not consumers Regulated business environment (Regulatory/Government Bodies) Regular update of information required with continuous changing Business environment Financial crisis & Scams- Create a turbulent market of uncertainty (Impacts the company‟s overall Growth Story & Fund Raising capabilities)©2011
  • 8. Telling a Financial Story To The Stakeholders Who Will Validate It - Listed Corporates How can the stakeholders validate the financial information? Analysis • Financial statements & Results How is it possible? • Management forecast • Key performance indicators Supply of Financial InformationTimely…Qualitative…Adequate…Reliable…Accurate…Indicative©2011©2011
  • 9. PR For Financial Firms – How It Is Different? Mutual Funds & Equity Traded Funds  Understanding of Regulatory & Communication Guidelines differs from each country.  Philosophy of Fund Managers and Mutual Fund Companies.  Value Investor : Looks for stocks with potential long term growth  Growth Investing- Buy low and sell high  Blend investing – Is a combination of the above two  Aggressive growth Investing – High Risk, High return  Momentum Investing – Catch a good script and ride the wave to exist with a medium to good return  Peer Group & Media trends mapping & products – Its about building the brand.  ETF are the next big funds as they are investing in Gold and give excellent return©2011
  • 10. Transaction Communications- IPO & M&A  Need timely communication at the time of deal.  Knowledge of regulation governing an IPO or M&A is important and is regulated by securities regulator, the China Securities Regulatory Commission (CSRC).  Communication needs to be in line with regulators and approved by lawyers as is a practice all over the world ie IPO listing on LSE or in China  Fresh issue of equity / debt requires communications to attract investors – we need to tell a story on why we are raising funds, growth of industry and our plans in order to make the story attractive  Mergers & Acquisitions, Price - Earnings, Venture Capital deals need planned & strategic communications  Valuation of the business & company is the key communication here In Touch : Investment Bankers, Corporate Lawyers, Corporates who are your clients, Consultant Firms; i.e. Ernst & Young, PWC, KPMG, Deloitte Touche Tohmatsu , Boston Consulting Group. Every Region will have top 4 names.©2011
  • 11. Communication for BFSI Sector Banking & Financial Services Insurance Business Segmentation Commercial Banks: Life & General  Government Banks  Private Banks  MNC Banks  Insurance  Capital Market Banking Advisory  Wealth Management  Underwriting  FOREX Management  Re-insurance  Asset Management  Retail Banking  Hedge Fund Management  Institutional Banking  Investment Banking  Stock Broking – Intermediary  Private Equity Funds  Venture Capital Funds  Angel Investment  Financial Litigation©2011©2011
  • 12. Communication Imperatives Key Triggers for Communication Needs for BFSI:  Fast growing sector – Reach beyond urban markets, semi-urban & rural as well  Expanded service basket amid fierce competition  Product & services differentiation – Key positioning required  Geographical challenges – product & service distribution  Mass-scale consumer orientation required on real-time basis  Growing dependence on facilitators including communication counsel  Complex compliance requirements & adherence to regulatory framework Communication Areas Need to leverage these areas  New products, services & geographical expansion  Product distribution  Product innovation  Operational flexibility – Peer comparison  Infrastructure capabilities  Financial reporting & regulatory compliance – Assets/Liabilities Quality, Governance, etc Communication: Strengthening Business Relationships & Quality of Services©2011©2011
  • 13. INVESTOR RELATIONS©2011 06.29.2010 | P13
  • 14. Why Do Corporates Need Investor Relations? Investor relations (IR) is a set of activities which relate to the ways in which a companydiscloses information required for regulatory compliance and good investment judgment to bond and/or shareholders and the wider financial markets.  To appropriately convey performance to shareholders & keep co-owners informed  To support corporate positioning  Clear communication helps to secure fair valuation & market company‟s stock  To build corporate reputation, trust and credibility  To create information level playing field  To unlock Value  Good corporate citizenship©2011
  • 15. What Does It Consists Of? INVESTOR RELATIONS Securities Communica Law tions Compliance Finance MarketingInvestor Relations enables the most effective two-way communication between acompany, the financial community and other constituencies, which ultimately contributeto a companys securities achieving fair valuation.©2011
  • 16. Components Of Investor Relations  Consistent proactive communication  Quarterly result updates / press release  Important corporate developments  Choice of appropriate outreach tool  Analyst meet Vs conference call  Facility visit  One-to-one meetings  Regular feedback  Constant touch with investing community©2011
  • 17. Important Criteria For Investor Relations  Consistency & transparency of Investor Relations  Understanding of Markets & Valuation  Business knowledge / insights from team  Quality of one-on-one meetings / conferences  Quality of service from Investor Relations team©2011
  • 18. Business Knowledge / Insights From IR Team  Understand the Company, Industry  Products and Services you bring to the Market  Markets you compete in  Demand drivers, market opportunity  Growth characteristics, operating metrics, segment profitability  Keep track of latest developments in the Company©2011
  • 19. Activities Under Investor Relations Concalls One-on-One Meeting It is essential to communicate the investor Most analysts prefer having a direct community during quarter/annual results of update from the company‟s top the company. Through this, the company can management. This helps them to address the current and future plans and understand the company better and can achievements of the company. It is the most also come up with research reports. preferred mode as it is economical, easy to access and can be reached to a large number of people in a short time frame. Bridge-Building Meeting Analyst MeetingIt is advisable to conduct these meetings as it Through this, the management of theprovides an opportunity to introduce your company can interact with the entirecompany to various financial institutions and research analyst community in a span ofadvisories. This also helps in establishing three hours. However, it is alwaysstrong relationships with the target groups. advisable to conduct these meetings once a year as the costing for these meetings is generally high.©2011
  • 20. Quarterly Result Planning Preferably Early Within 15 minutes in the day of conclusion on board meetingAudit Comm. Intimation to Uploading resultsMeeting stock exchanges on the website Board Meeting before 12 noon Media Briefing Analyst Briefing One-to-one Select briefing Concall Analyst meet ©2011
  • 21. OUR AUDIENCE©2011 06.29.2010 | P21
  • 22. Target Audience  Sell-side Analysts : Analysts who sells equity ideas mainly from Stock Broking Houses & Investment Banks  Buy-side Analysts: Analysts who supports fund managers from Various Funds; PEs, Etc..  Fund Managers: manages different portfolios of funds  Portfolio Managers: individual portfolio managers mainly provides by PCG/HNI segments of broking houses and investment banks.  Financial Media : media reporting about financial performances and businesses.©2011
  • 23. Sell-Side Analysts - Motivation  Sector specialists with Institutions like Asset Management companies  Research prominent companies within the sector with an objective to make a recommendations  Recommendations could be – Buy, Sell, Hold, Outperform, under- perform, market performer, overweight, underweight  Motivation is to identify stocks which have potential to go up further  Essentially a cost centre, exist to generate higher broking income©2011
  • 24. Dealing With Sell-Side Analysts Our Objective  Help them make correct assessment about revenue and profitability  Create consensus about strategy and future outlook  Gain positive endorsement  Receive feedback How do we deal with them?  Educate about the sector  Educate about the company  Help them make correct assumptions  Remove wrong notions  Continuous update  Do not provide opinion on their projected numbers©2011
  • 25. How Do They Work?  Spend lot of time with the company  Understand growth triggers and value drivers  Make assumptions  Ultimately interested in projecting EPS for the next two years (Net Income – Dividends divided by Average outstanding shares)  Use different valuations techniques and justify recommendation Finally what matters….?  All the sell-side analysts have positive recommendations  No major discrepancies in their estimates, recommendations©2011
  • 26. Some Of The Top Institutions In APAC Region Today‟s financial marketplace is dominated by institutional investors, particularly the new breed of professional investor represented by hedge funds (proprietary investment partnerships). Consequently, increasing institutional ownership can be one of the most important catalysts to sustainable share price appreciation.©2011
  • 27. Summary Of Attributes Valued By Investors Valued by Steps we can take Media/Investors/Analysts Better qualitative and quantitative disclosure Transparency standards in Annual Reports / Financial Statements Timeliness of Be the first one to deliver the news “Good” or Communication “Bad” Frequency of Regular Analyst Meets / Conference calls post Communication results announcements. Management Credibility Create track record of corporate governance Articulate your differentiation vis- a- vis local and Strategy global competition Encourage research analysts to print research on Availability of research the company. Don‟t prepare perfect answers. Perfect answers Ability to face “What if” may not be the right answer. questions Demonstrate awareness and willingness to deal with the situation27 ©2011
  • 28. YOUR ROLE©2011 06.29.2010 | P28
  • 29. Establishing Financial Communication Processes Establishing calendar of events Identifying spokespersons for different constituencies i.e. media, analysts, fund managers Work on key messages Establishing Standard Operating Procedures (SOP) Create a mechanism for responding to media & investor queries Keeping messaging consistent over time and across spokespersons Establishing a Disclosure Policy Create mailing list of buy-side and sell-side analysts Enhancing / updating corporate website for better investor interface©2011
  • 30. Quality Of Service expected from Financial Communication Team  Domain Knowledge ie. Banking, Non Banking, Insurance, Mutual Funds, Equity Markets/ Financial Markets & listed companies and their sector ie Steel, Wind Energy, Power etc  Investor Relations function must demonstrate integrity, leadership and ownership  Be Accessible and provide access to Management based on knowledge  Place a high priority on response time  Anticipate issues, be prepared to respond to current events  Keep expectations balanced©2011
  • 31. Key To Success In Financial Communication  Your Commitment & involvement – Be see as an advisor  Consistent and credible - communications  Clearly articulated, credible business strategies  Open discussion of financial results / expectations  Regular contact with client & financial community ie. Investment Bankers, Research Analyst, Influencers, Brokers.©2011
  • 32. Cases - Highlight©2011©2011
  • 33. Seoul International Financial Hub  Service Period: March 2009 ~ December 2010  Client: Seoul Metropolitan Government (Invest Promotion Division)  Objective: To position the City of Seoul as Asia‟s next Financial Center and help increase investment attractiveness of its financial industry among international investors  Activities: The Banker (2009) – Established new English information kits and distributed to financial leaders and professionals (direct marketing) – Produced creative promotional video, which shown at international conferences/roadshows – Uploaded the video clip on YouTube and created linked banner ads at FT.com, WSJ.com, Economist.com and BBC.co.uk – Created and sent E-Newsletter „Seoul Finance Premium Quarterly‟, including vision of SFC, contribution of a foreign CEO in Seoul, to 500 local & overseas financiers – Arranged speaking opportunities at large financial seminars to secure opportunities for on-site promotion of Seoul City – Co-planned and provided on-site support for Seoul‟s overseas investment roadshows held in Hong Kong, Singapore, and London – Generated positive coverage on SIFC both in domestic/international media  Results: − Seoul ranked the world‟s 16th most competitive financial city by the 9th Global Financial Centres Index − Promotional video clip won Grand Prize at Korea Digital Media Award and Gold Winner at 2010/2011 International MERCURY Awards - Awarded the Gold Prize in PR Awards hosted by Korea Association of Advertising & Public Relations©2011
  • 34. Citigroup Global Markets Korea Securities (CGMK)  Service Period: Feb 2008 ~ Mar 2010  Client: Citigroup Global Markets Korea Securities  Objectives: Build CGMK‟s corporate profile as a leading player in the Korean ELW and structured financial products market  Activities - Media campaign for CGMK‟s ELW business launch in Korea - Strategic media relationship programs, including roundtable <Feature article> “CGMK Enters into Domestic ELW Market” and educational workshop22 Feb 2008, Maeil Business Newspaper - Speaking opportunity arrangement in industry-relevant conference - Publicity – by-lined articles, press releases, interviews  Results - Helped the company‟s successful news business launch and settlement in Korea through well-organized publicity initiatives and promotional activities targeting investors <Interview> “You should be prepared in order to invest in ELWs with high leverage”<Contributed Column> "Take advantage 20 Mar 2009, Maeil Business Newspaper of derivatives as investment option” 19 Apr 2010, Hankyung Business ©2011
  • 35. Western Union Money Transfer® Strategy & Implementation  Strategy for rural India to educate the masses as well as increasing recall for the brand Western Union Money Transfer® through road shows, support for local events, community development initiatives, etc  Constant media updates on new alliances of Western Union that contributed to increasing network of Agent Locations  Created local marketing activities supported by localized PR in rural markets for different states:  Rural Olympics in Punjab  Ajmet Urs – Rajasthan  Deva Shariff – Lucknow  Support for Tibet settlements, among others…©2011 35
  • 36. Bharati AXA Life Insurance Our Mandate  Highlight the synergies between Bharti & Axa and thereby build a strong platform for the launch of the Company  Popularize Bharti Axa Life Insurance‟s corporate launch campaigns  Position Bharti Axa Life Insurance as “A revolutionary in the life insurance space”  Project their spokespeople as industry thought leaders Situation  Presence of a dominant public sector player… “LIC”  Media clutter (in terms of brand messaging)  Maintain a respectable „Share of Voice‟ in category media spends and industry stories…(Especially being a new entrant in the market) Strategy  Promote Bharti Axa Life‟s dignitaries  Establish MD&CEO as a thought leader in the Insurance space  Develop the second rung of spokes people from the senior management team as corporate spokespeople  Adopt senior journalists to establish Bharti Axa Life in the market as one of the leading private insurance player in the nation  Increase Bharti Axa Life‟s visibility in Tier II &III cities  Initiate Non Media Activities©2011 36
  • 37. Piramal – Vodafone Deal Program Highlighting the importance of the deal and showcasing the entrepreneurial mindset of Mr. Ajay Piramal among the stakeholders. To provide a humungous Business platform considering the size of the deals Standard which was split in two separate tranches. CNBC TV18 Key Challenges  Handling the entirety of the deal and Hindu strategizing it in two separate events Business Line  Building a sustained interest from the media as well as the shareholders towards the second part of the deal The  Creating a stronger content than the firstEconomic Financial part of the deal in order to keep the Times Express importance of the deal ET Now Results  An overwhelming response with a positive outlook by the media  Wires, Publications, Electronic Channels lining-up to grab the first-cut on the deal  Every known business media house carried the coverage extensively DNA  Acknowledgements on the strategic Mint move by Mr. Piramal poured in from Money various financial experts ©2011
  • 38. Fortis Healthcare – Fortis International Deal Program Furthering to Fortis Healthcare‟s acquisition spree rumors, it was essential to attract the key media to cover the news exclusively. Known for their entrepreneurial successes, the promoters had to be brought in the fore front of the media to address the stakeholders on the positive developments surrounding the deal. Hindu Key Challenges Financial The Business  Rumors about a negative deal making Express rounds among the mediaEconomic Hindustan Line  The Singh Brothers reluctance to Times Times address the media Results  Exclusive interactions covered by Reuters and other key Financials in India  News covered across Mainlines, Wires, Financials, Electronic Channels, Regional Media etc.  Wide spread response from across the Business shareholders and Financial Community Indian Standard Express ©2011
  • 39. Binani Industries – 3B Deal Program Sensitize Binani‟s 3B – The Fiberglass Company acquisition by projecting the same on an international arena. Leverage the acquisition to foster Binani Industries‟ positioning in the corporate league. Generate sound bytes to the news and project the Group as a global conglomerate The in offing. Economic Key Challenges Times  A pre-cursor news was already in the Kerala public domain Bhushanam  Attracting international media to the news in European markets  Building a strong content to make the announcement newsworthy for national & international media Business  Execution of the news considering the Bhaskar different time-zones across the globe Hindu Business Results Line  Countering the odd time of the release  Activation of media interest on a larger scale at odd hours – 10 biggest publications of India responding positively Business  Break-through in TOI, ET, BS, HBL, DNA as Standard lead news  News covered by all Electronic Channels during Prime Time  Journalists queuing up with ‘interactions’ requests Financial Times of  News covered by all Mainlines, Financials, Chronicle India Regional, Electronic Channels, Wires nationally and internationally©2011
  • 40. National Highway Authority of India Program Hanmer MSL was given the mandate to create awareness among retail and The Hindu institutional investors about the 1000 cr. Business Line public issue of Tax Free Secured The Economic Times Redeemable Non Convertible Bonds in Kolkata and Bengaluru. Key Challenges  Volatile market conditions The Times of  Very short notice to the media and India broking houses to attend the conference The Financial Results Express • All leading media houses in print, electronic, wires and onlines including The Economic Times, Business Standard, Deccan Herald Hindustan Times, Dainik Jagaran, Vijay Karnataka, Bloomberg, PTI etc. attended the conferences across Bangalore and Kolkata • The Economic Times carried the news about the NHAI issue as a banner headline in all its editions across the country, highlighting the high – quality of Business Standard media relations that HANMER MSL Dainik Jagaran possesses • The bonds issue was oversubscribed three times©2011
  • 41. Muthoot Finance Program Hanmer MSL was given the mandate to create awareness about the 600 cr. public issue of The Economic Times secured, redeemable, non-convertible debentures (“NCDs”) to open on December 22, 2011 across 10 cities Key Challenges ET NOW  Volatile market conditions  Very short notice for the media to attend the Business Standard- conference Smart Investor Divya  Story featured in certain publications andBhaskar websites much ahead of the conference Results Hindustan  All leading media houses in print, electronic, wires and onlines including The Economic Times, Business Standard, Hindustan Times, ET NOW,NDTV Profit Dainik Jagran, Malayala Manorama, etc attended the conference and covered the news The Hindu in all ten cities . Business Line  Press release disseminated in Tier II towns Malayala Manorama received coverage in most leading publication  Most Publication mentioned the NCD issue as a profitable investible option ©2011 41
  • 42. ©2011