Investor relations development to attract capital to Egypt
Currently, small-, micro- and some large-capital companies in Egypt are receiving limited research coverage and display a lack of credibility, leading to little investment opportunities, which screams the need for management to pursue investors more aggressively and offer more transparency in order to attract capital to their company. Ultimately, investors need to know why they would pour their money into a company. Slowly, but surely, investor relations (IR) is developing in Egypt to help companies devise their profiles and package their images in an informative and transparent manner.
All companies listed in the Egyptian Stock Exchange are required by law to have an IR department. However, according to Cairo-based IR firm BTG’s managing directors, Tarek Foda, Karim Sheir and Taymour Emam, the majority of such companies create these departments “symbolically”, yet without fulfilling their intended role.
An IR department – or the “mouthpiece department” as Foda pointed out – is dedicated to answering all inquiries from all possible investors and analysts, including shareholders. The department creates corporate profiles, fact sheets, news releases, earnings information, road shows and various types of investor presentations to help clarify investment appeals. “Basically, IR is public relations, but targeted at the whole financial community,” explains Sheir.
Evidently, Egypt severely lacks IR; out of the 218 companies listed on The Egyptian Stock Exchange, less than 15 per cent have a running and efficient IR department, states Foda. By increasing companies’ transparency to reach investors they can also increase liquidity and share value, by providing accurate fact sheets, updating company profiles and creating presentations and annual reports, among other services.
“IR has to have strategic credibility,” says Foda, ” It should also enhance internal, as well as external, communication and make the company’s future and financial strategies clear.”
As investors can get lost in a world of terminology between what’s expressed in balance sheets, company profiles and websites, there are many IR companies out there, such as BTG, which help to unify all of the financial jargon into a single, informative language, explained Emam. “For example, we can take a company’s website and develop it, from a content and a design point of view, to make it match what is written on all other material of that company – whether financial or otherwise,” he adds.