AN UNDERSTANDING OF FINANCIAL COMMUNICATIONS & INVESTOR RELATIONS

BY JAIDEEP SHERGILL CEO & HEAD FINANCIAL COMMUNICATIONS ASIA

Feb 2012 06.29.2010 | P1

2011

INDEX

Financial Communications
Asia Offering PR for Financial Firms Investor Relations

An Understanding

Listed Corporates, IPO & M&A, BFSI

Your Role In Financial Communication

Case Studies

2011 2011

FINANCIAL COMMUNICATIONS INTRODUCTION

2011

06.29.2010 | P3

Financial Communications An Understanding

Financial Communication

PR - Financial Firms

PR Listed Corporates

PR Financial Deals

Banks Insurance Mutual Funds Non Banking Financial Companies Broking Firms

Corporate Earnings Corporate Governance Statutory Compliance Disclosure Policy Investor Relations

Equity Capital Markets IPO/ FPO/Rights Debt Capital Markets NCD/FCD/Bonds Transaction Communications-M&A

2011

Financial communications- Asia Offering

Investor Relations / Disclosure
IPOs and other listings Complex disclosures Quarterly and annual reporting Roadshow presentations Financial community intelligence Investor targeting

Corporate Communications and Positioning

Integrated programs, including: Media relations Thought leadership programs Investor relations Internal programs Government affairs

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 Governance
Proxy contests Shareholder activism CEO succession planning Board accountability

Special Situations and Crisis Communications

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

2011 2011

PR FOR FINANCIAL FIRMS CORPORATES / IPO & M&A/ BFSI

2011

06.29.2010 | P6

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 companys overall Growth Story & Fund Raising capabilities)

2011

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

Management forecast Key performance indicators

How is it possible?

Supply of Financial Information

TimelyQualitativeAdequateReliableAccurateIndicative
2011 2011

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

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

Communication for BFSI Sector

Banking & Financial Services Business Segmentation
Commercial Banks: Government
Banks Private Banks MNC Banks

Insurance

Life & General

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

Retail Banking Institutional Banking Investment Banking

2011 2011

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

INVESTOR RELATIONS

2011

06.29.2010 | P13

Why Do Corporates Need Investor Relations?

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.

To appropriately convey performance to shareholders & keep co-owners informed

To support corporate positioning Clear communication helps to secure fair valuation & market companys stock

2011

To build corporate reputation, trust and credibility To create information level playing field To unlock Value Good corporate citizenship

What Does It Consists Of?

INVESTOR RELATIONS

Securities Law Compliance Finance Marketing

Communica tions

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.
2011

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

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

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

Activities Under Investor Relations

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

Concalls
It 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 Meeting
It 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 Meeting
Through 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.

2011

Quarterly Result Planning

Preferably Early in the day

Within 15 minutes of conclusion on board meeting

Audit Comm. Meeting Board Meeting before 12 noon

Intimation to stock exchanges Media Briefing

Uploading results on the website Analyst Briefing Concall

One-to-one

Select briefing

Analyst meet

2011

OUR AUDIENCE

2011

06.29.2010 | P21

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

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, underperform, 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

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

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

Some Of The Top Institutions In APAC Region

Todays 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

Summary Of Attributes Valued By Investors

Valued by Media/Investors/Analysts Transparency Timeliness of Communication Frequency of Communication Management Credibility Strategy Availability of research

Steps we can take Better qualitative and quantitative disclosure standards in Annual Reports / Financial Statements Be the first one to deliver the news Good or Bad Regular Analyst Meets / Conference calls post results announcements. Create track record of corporate governance Articulate your differentiation vis- a- vis local and global competition

Encourage research analysts to print research on the company.

Dont prepare perfect answers. Perfect answers may not be the right answer. Demonstrate awareness and willingness to deal with the situation

Ability to face What if questions

27

2011

YOUR ROLE

2011

06.29.2010 | P28

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

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

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

Cases - Highlight

2011 2011

Seoul International Financial Hub

The Banker (2009)

2011

Service Period: March 2009 ~ December 2010 Client: Seoul Metropolitan Government (Invest Promotion Division) Objective: To position the City of Seoul as Asias 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 Seouls overseas investment roadshows held in Hong Kong, Singapore, and London Generated positive coverage on SIFC both in domestic/international media Results: Seoul ranked the worlds 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

Citigroup Global Markets Korea Securities (CGMK)

Service Period: Feb 2008 ~ Mar 2010 Client: Citigroup Global Markets Korea Securities Objectives: Build CGMKs corporate profile as a leading player in the Korean ELW and structured financial products market Activities - Media campaign for CGMKs 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 companys successful news business launch and settlement in Korea through well-organized publicity initiatives and promotional activities targeting investors

<Feature article> CGMK Enters into Domestic ELW Market 22 Feb 2008, Maeil Business Newspaper

<Contributed Column> "Take advantage of derivatives as investment option 19 Apr 2010, Hankyung Business

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

2011

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

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 Insurances 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 Lifes 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 Lifes visibility in Tier II &III cities

Initiate Non Media Activities

2011

36

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 platform considering the size of the deals which was split in two separate tranches.
CNBC TV18

Business Standard

Key Challenges
Hindu Business Line The Economic Times

Financial Express

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

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

Mint DNA Money

2011

Fortis Healthcare Fortis International Deal

Program
Furthering to Fortis Healthcares 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.

The Economic Times

Hindustan Times

Financial Express

Hindu Business Line

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

Business Standard

Indian Express

2011

Binani Industries 3B Deal

Program
Sensitize Binanis 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.

The Economic Times Kerala Bhushanam

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

Business Bhaskar

Hindu Business Line

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

Business Standard

Financial Chronicle
2011

Times of India

National Highway Authority of India

Program
Hanmer 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.

The Economic Times

The Hindu Business Line

Key Challenges
The Times of India The Financial Express

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

Deccan Herald

Dainik Jagaran

Business Standard

2011

Muthoot Finance
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

The Economic Times

ET NOW

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

Divya Bhaskar

Business StandardSmart Investor

Hindustan

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

NDTV Profit The Hindu Business Line Malayala Manorama

2011

41

2011