©2011 06.29.2010 | P1

AN UNDERSTANDINGOF

FINANCIAL COMMUNICATIONS &

INVESTOR RELATIONS

BY JAIDEEP SHERGILLCEO & HEAD FINANCIAL COMMUNICATIONS ASIA Feb 2012

©2011©2011

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

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FINANCIAL COMMUNICATIONS -

INTRODUCTION

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Financial Communicati

on

PR - Financial Firms

BanksInsurance

Mutual FundsNon Banking Financial

CompaniesBroking Firms

PR – Listed Corporates

Corporate EarningsCorporate GovernanceStatutory Compliance

Disclosure PolicyInvestor Relations

PR – Financial Deals

Equity Capital MarketsIPO/ FPO/Rights

Debt Capital MarketsNCD/FCD/Bonds

Transaction Communications-M&A

Financial Communications – An Understanding

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Transaction Communications

• M&A – friendly and contested, international and domestic

• Divestitures / spinoffs• Recapitalizations• Post-acquisition / integration

programs• IPOs & other listings

Private Equity / Hedge Funds

• Strategic positioning for alternative investment firms

• Media relations• Transaction support• Portfolio company support

Corporate Communicationsand Positioning

• Integrated programs, including:

• Media relations• Thought leadership programs• Investor relations• Internal programs• Government affairs

Special Situations andCrisis Communications

• Crisis communications• Litigation support• Regulatory matters• Bankruptcies / restructurings• Investigations• Senior Executive changes• Product recalls

Corporate Governance

• Proxy contests• Shareholder activism• CEO succession planning• Board accountability

Financial communications- Asia Offering

Investor Relations / Disclosure

• IPOs and other listings• Complex disclosures• Quarterly and annual

reporting• Roadshow presentations• Financial community

intelligence• Investor targeting

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PR FOR FINANCIAL FIRMSCORPORATES / IPO & M&A/ BFSI

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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)

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How can the stakeholders validate the financial

information?

Analysis

• Financial statements & Results

• Management forecast

• Key performance indicators

How is it possible?

Supply of Financial Information

Timely…Qualitative…Adequate…Reliable…Accurate…Indicative

Telling a Financial Story To The Stakeholders Who Will Validate It - Listed Corporates

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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

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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

Transaction Communications- IPO & M&A

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.

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Communication for BFSI Sector

Banking & Financial Services Insurance

Commercial Banks: Government Banks Private Banks MNC Banks

Capital Market Banking

Wealth Management

FOREX Management

Asset Management

Hedge Fund

Management

Stock Broking –

Intermediary

Private Equity Funds

Venture Capital Funds

Angel Investment

Financial Litigation

Insurance Advisory

Underwriting Re-insurance

Life & General

Retail Banking Institutional

Banking Investment

Banking

Business Segmentation

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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

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

Need to leverage these areas

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INVESTOR RELATIONS

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Why Do Corporates Need Investor Relations?

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

Investor relations (IR) is a set of activities which relate to the ways in which a company discloses information required for regulatory compliance and good

investment judgment to bond and/or shareholders and the wider financial markets.

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INVESTOR RELATIONS

Finance

Securities Law

Compliance

Marketing

Communications

Investor Relations enables the most effective two-way communication between

a company, the financial community and other constituencies, which ultimately

contribute to a company's securities achieving fair valuation.

What Does It Consists Of?

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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

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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

Important Criteria For Investor Relations

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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

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Activities Under Investor Relations

One-on-One MeetingMost analysts prefer having a direct update from the company’s top management. This helps them to understand the company better and can also come up with research reports.

ConcallsIt is essential to communicate the investor community during quarter/annual results of the company. Through this, the company can address the current and future plans and achievements of the company. It is the most 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 MeetingIt is advisable to conduct these meetings as it provides an opportunity to introduce your company to various financial institutions and advisories. This also helps in establishing strong relationships with the target groups.

Analyst MeetingThrough this, the management of the company can interact with the entire research analyst community in a span of three hours. However, it is always advisable to conduct these meetings once a year as the costing for these meetings is generally high.

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Quarterly Result Planning

Audit Comm. Meeting

Board Meeting before 12 noon

Intimation to stock exchanges

Media Briefing

Uploading results on the website

Analyst Briefing

Preferably Early in the day

Within 15 minutes of conclusion on board meeting

One-to-one Select briefing

Concall Analyst meet

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OUR AUDIENCE

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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.

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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

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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

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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

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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.

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Summary Of Attributes Valued By Investors

Valued by Media/Investors/Analy

stsSteps we can take

· Transparency· Better qualitative and quantitative disclosure

standards in Annual Reports / Financial Statements

· Timeliness of Communication

· Be the first one to deliver the news “Good” or “Bad”

· Frequency of Communication

· Regular Analyst Meets / Conference calls post results announcements.

· Management Credibility

· Create track record of corporate governance

· Strategy · Articulate your differentiation vis- a- vis local

and global competition

· Availability of research

· Encourage research analysts to print research on the company.

· Ability to face “What if” questions

· Don’t prepare perfect answers. Perfect answers may not be the right answer.

· Demonstrate awareness and willingness to deal with the situation

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YOUR ROLE

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Establishing Financial Communication Processes

Enhancing / updating corporate website for better investor interface

Create mailing list of buy-side and sell-side analysts

Establishing a Disclosure Policy

Keeping messaging consistent over time and across spokespersons

Create a mechanism for responding to media & investor queries

Establishing Standard Operating Procedures (SOP)

Work on key messages

Identifying spokespersons for different constituencies i.e. media, analysts, fund managers

Establishing calendar of events

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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

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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.

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Cases - Highlight

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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:– 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

The Banker (2009)

Seoul International Financial Hub

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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 and educational workshop- 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

<Contributed Column> "Take advantage of derivatives as investment option”

19 Apr 2010, Hankyung Business

<Feature article> “CGMK Enters into Domestic ELW Market”

22 Feb 2008, Maeil Business Newspaper

<Interview> “You should be prepared in order to invest in ELWs with high leverage” 20 Mar 2009, Maeil Business Newspaper

©2011

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…

Western Union Money Transfer®

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©2011

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

Bharati AXA Life Insurance

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©2011

ProgramHighlighting the importance of the deal and showcasing the entrepreneurial mindset of Mr. Ajay Piramal among the stakeholders. To provide a humungous platform considering the size of the deals which was split in two separate tranches.

Key Challenges Handling the entirety of the deal and

strategizing it in two separate events

Building a sustained interest from the media as well as the shareholders towards the second part of the deal

Creating a stronger content than the first part of the deal in order to keep the importance of the deal

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

Acknowledgements on the strategic move by Mr. Piramal poured in from various financial experts

Piramal – Vodafone Deal

Mint

Business Standard

Hindu Business

Line

The Economic

Times

DNA Money

Financial Express

CNBC TV18

ET Now

©2011

ProgramFurthering 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.

Key Challenges Rumors about a negative deal

making rounds among the media The Singh Brothers reluctance to

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 shareholders and Financial Community

Fortis Healthcare – Fortis International Deal

Business

Standard

Financial

Express

Hindu Business Line

Indian Express

Hindustan Times

The Economic Times

©2011

ProgramSensitize 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 in offing.

Key Challenges A pre-cursor news was already in the

public domain Attracting international media to the

news in European markets Building a strong content to make the

announcement newsworthy for national & international media

Execution of the news considering the different time-zones across the globe

Results 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

Break-through in TOI, ET, BS, HBL, DNA as lead news

News covered by all Electronic Channels during Prime Time

Journalists queuing up with ‘interactions’ requests

News covered by all Mainlines, Financials, Regional, Electronic Channels, Wires nationally and internationally

Binani Industries – 3B Deal

The Economic Times

Business Standard

Financial Chronicle

Times of India

Hindu Business Line

Business

Bhaskar

Kerala Bhushanam

©2011

ProgramHanmer MSL was given the mandate to create awareness among retail and institutional investors about the 1000 cr. public issue of Tax Free Secured Redeemable Non Convertible Bonds in Kolkata and Bengaluru.

Key Challenges Volatile market conditions Very short notice to the media and

broking houses to attend the conference

Results• All leading media houses in print,

electronic, wires and onlines including The Economic Times, Business Standard, 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 media relations that HANMER MSL possesses

• The bonds issue was oversubscribed three times

National Highway Authority of India

The Economic Times

The Financial Express

Dainik Jagaran

Deccan Herald

Business Standard

The Times of India

The Hindu Business Line

©2011

Program Hanmer MSL was given the mandate to create awareness about the 600 cr. public issue of secured, redeemable, non-convertible debentures (“NCDs”) to open on December 22, 2011 across 10 cities

Key Challenges

Volatile market conditions

Very short notice for the media to attend

the conference

Story featured in certain publications and

websites much ahead of the conference

Results All leading media houses in print,

electronic, wires and onlines including The

Economic Times, Business Standard,

Hindustan Times, ET NOW, Dainik Jagran,

Malayala Manorama, etc attended the

conference and covered the news in all ten

cities .

Press release disseminated in Tier II towns

received coverage in most leading

publication

Most Publication mentioned the NCD issue

as a profitable investible option

Muthoot Finance

The Economic Times

Business Standard-

Smart Investor

Malayala Manorama

NDTV Profit

ET NOW

Hindustan

Divya Bhaskar

The Hindu Business Line

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