News & Insights

25/10/2019

Is your ‘story good to tell’ in an evolving marketplace?by Noha Habib


 

Four companies announced their intent to list in recent weeks and at the eleventh hour, all four IPOs had been shelved. In the days and weeks to come, we will no doubt see countless explanations about why these companies - that are heavily advised by some of the country’s most eminent listing experts - have failed to secure sufficient demand and support for their respective bookbuilds to take their stocks public.
 

Tony Boyd says in his article this week - that “fund managers have been happy to rush into companies with good stories to tell”.
 

These recent failed IPOs reinforce the need to address the nagging question that financial communicators have no doubt tried to push to the top of the agenda in those endless company-advisers transaction meetings. The question is what makes an equity story compelling and good to tell prospective investors in this evermore noisy marketplace?
 

It goes without saying that companies considering going public should focus on the presentation of their current operations and financials as well as their future growth options in their investment proposition and equity story.
 

However, considering the Latitude IPO for example, the financial attributes and performance indicators alone were not sufficient to address the valuation gap related to the potential growth opportunities and overall future sustainability of the business. This gap between the company view and the market view effectively led to a breakdown of communication between the investors and bankers on the case despite earlier positive signs of commitment.
 

In the case of WeWork, doubts were cast regarding the operations and financials of the company which affected its overall equity story. But it was the softer non-financial matters related to the credibility of the management particularly the CEO and the quality of business processes that ultimately kicked the bucket for the company.
 

The undeniable fact is that the Australian capital market is undergoing a watershed transition period where softer non-financial attributes have taken centre stage for institutional and sophisticated investors. At the same time foreign investors have made clear their positioning on alignment of ESG and other components of responsible investment strategies that look beyond the financials of companies.
 

In this new market reality, a ‘good story to tell’ should be by design.
 

Companies intending to list, or to engage the capital market, need to up their game and present a better narrative and equity story that consists of all the traditional financials but also clearly covers its non-financial attributes. These may be the long-term vision for a sustainable business, the quality and credibility of its management, its people and culture strategy and succession planning, as well as innovation, scalable capabilities, quality of business processes and execution on corporate strategies. The story should also address clearly and definitively the influences that affect the sector and market overall.
 

This type of holistic equity story is what investors want to hear to help ease their process of separating the wheat from the chaff when committing capital to IPO suitors.  

Stay Connected

If you wish to stay connected to Honner and receive future blogs, simply enter your email address below.

Subscribe

Latest News And Insights

Honner Blog 27/05/2020

Honner survey: what COVID-19 has meant for the way financial journalists work

We wanted to understand what COVID-19 has meant for the way financial journalists work, so we did a survey to find out. Here’s what we discovered, writes Managing Director, Paul Cheal. 
 

READ MORE   >

Honner Blog 19/05/2020

Media in the new normal of COVID-19

The COVID-19 crisis has changed every aspect of our lives, and this has been especially true for the media, who have been working round the clock like any other front-line essential worker. With everything else around the world practically coming to a standstill, the news cycle has picked up pace, buzzing with demand for trusted, timely and relevant information like never seen before.

READ MORE   >

Honner Blog 6/03/2020

Favourable news coverage is not a ‘great outcome’ – so let’s stop calling it that

It is a common mistake in PR to refer to positive news coverage as a “great outcome”. AMEC has defined communicational outcomes as the effects in the perceptions, attitudes and behaviour of our target audience. None of these changes are observable through news coverage.

READ MORE   >

Honner Blog 2/03/2020

Communication strategies to support nervous investors: a guide for fund managers

The coronavirus is currently spreading, bringing with it panic and anxiety for investors of all types around the globe. In an industry where it is difficult to differentiate your offering, quality, timely communications and the way you deliver it can clearly distinguish your brand.

READ MORE   >

Honner Blog 19/02/2020

Investment Management in Australia: Where are the women?

Research shows that the ability of businesses to build high performing teams depends on attracting and valuing diverse talent who bring different perspectives. Yet the majority of teams in the investment industry remain very male dominated. In our latest blog, Philippa Honner speaks with Yolanda Beattie, the founder of founder of Future IM/Pact, which aims to achieve an equal number of women and men in junior analyst roles by 2023.

READ MORE   >

View All    >