What is Investor Relations?
The globally accepted definition of Investor Relations was published by the National Investor Relations Institute (NIRI).
It defines Investor Relations as “a strategic management responsibility that integrates finance, communication, marketing and regulatory rules and compliance to enable the most effective two-way communication between a company and the financial community, which ultimately contributes to a company’s securities achieving fair valuation”.
Why is Investor Relations important?
The role of Investor Relations within listed companies has become more important in recent years due to the globalization of financial markets as well as the increasingly complex legal and regulatory obligations being imposed in relation thereto. In addition, as the competition for capital intensifies, it is becoming increasingly understood that a well-performing Investor Relations function can have a significant effect on attracting investment in a company and reduce the company’s cost of capital.
Investor Relations in the Middle East
The culture of effective Investor Relations practice is quickly evolving and expanding across the Middle East, in line with the rapidly developing regional capital markets. There have been a number of factors which have contributed to this growth:
- International investors are today increasingly global and financial instruments and products allow a greater number of investors across the world to easily access global investment opportunities.
- The Middle East and other emerging and frontier markets have received a great amount of attention as investors continue to look further and deeper for new opportunities in. The number and variety of funds with mandates to invest in the Middle East is growing.
- International investors looking at the Middle East are accustomed to certain practices with regards to disclosure, transparency, contact with management and IR etc. Regional companies that comply with international best practice IR standards are better placed to receive these investments.
As competition for capital continues to become increasingly intense, many listed (and unlisted) firms are realising the benefits of better managing the relationships with actual and potential financial stakeholders. Regional companies now aim to have a well-diversified stakeholder base and are increasingly investable for foreign institutional investors at the same time as the regions issuers become more active in primary international debt and equity capital markets. Changes in legislations and regulatory environments across Middle Eastern markets are also supporting this trend.
The Middle East Investor Relations Association encourages and supports such regulatory and market practice developments in the region.