Introduction to Investor Relations

History of Investor Relations 

The change of the US market from private shareholders to professional investors had shifted the focus of IR professionals from being communications specialists to finance professionals. The evolution of IR also saw the need to collate, interpret and understand shareholder patterns and behaviours. IR has now become established as the face of the company.

Function of Investor Relations

Investor Relations (IR) is the communication of information and insight between a company and its investors, existing or potential. IR facilitates a two-way communications process as it presents market feedback to the board. IR requires tact and diplomacy and the ability to read people, steer and guide conversations and react to unexpected developments. Additionally, an IR professional should be able to think on their feet and to deal with situations as diverse or challenging environments. The IR takes responsibility for consistent and accurate messaging across all market facing teams and strategically positioning the company with all stakeholders which include existing shareholders, debt investors, buy side and sell side analysts, brokers, ratings agencies, government and regulatory authorities, customers, employees and the financial press. 

How does IR operate

Large entities have a defined IR strategy which specifies the two-way communication approach, interaction with senior management, and identification of specific objectives. Regarding positioning of IR, businesses consider:

• IR’s reporting lines 
• Dialogue with EM and the board
• Placement within the organisation

The Head of IR is responsible for appropriately positioning business and proper allocation of relationship responsibilities. IR needs to stay closely connected to the finance function but also to the treasury, communications and marketing, compliance and legal areas.

IR professional requirements and implementation

Any competent IR professional should have strong communication, relationship building, and finance skill sets in equal measure, along with tact and diplomacy, as well as the ability to deal with adverse market environments. An IR function is a prerequisite for public companies and for those with debt funding programmes. IR is also important for companies ahead of an IPO as IR identifies and speaks to potential investors. IR is significant for those seeking to raise additional equity and for companies aiming to issue debt in the bond market. IR also plays an important role for asset managers, as they regularly report to their clients.