IntroductionThe definition adopted by the National investor Relations Institute states that investor relations (IR) is a strategic management responsibility using the disciplines of finance, communication, and marketing to manage the content and flow of company information to financial and other constituencies to maximise relative valuation.
Development and Practice of Investor RelationsThere has been an upward trend in the number of companies seeking an Initial Public Offering (IPO) and also in the participation of stock markets by both individual and institutional investors. Besides, with the increasing need for businesses to raise capital both locally and internationally has indeed created a catalytic effect on the development of businesses to attract and retain the interest of investors not only in their stocks but also in their companies. As a result, the role of Investor Relations Practitioners (IRPs) become increasingly important, if not, critical.
IR has, in recent years, sprang into more vital prominence, with more organisations establishing IR positions or expanding existing departments to undertake the demands for better relations with the investment community.
There are several factors that contribute to this surge in demand for IR Practitioners (IRPs).
- Increase in the number of companies whose shares are held by the public and institutional investors.
- Growing need for businesses to raise capital to meet increasing competition and to finance growth.
- Sophistication of financial analysts and their increasing concentration on larger companies.
- Sharp rise in the role of institutional investors – banks, insurance companies, fund managers – and their emphasis on disclosure and full valuation of shares.
- Demands for better management performance that is translated into higher share prices.
- More stringent requirements for disclosure of information by SGX.
- Expanding importance of foreign financial markets for financing local business and industry.
Profile of an Investor Relations PractitionerIRPs come from both different academic and professional backgrounds. Some began their careers in IR after having worked as stock analysts or in investment-related industries, while others entered the industry as former financial journalists. Increasingly, many polytechnic and university graduates have also found entry-level positions in investor relations. Senior IRPs tend to have eight or more years experience in this or related fields, and would have also represented companies from a variety of industries.
Elements of a successful Investor Relations PractitionerIn order to be a successful IRP, you must possess both communication and marketing skills, and also a good understanding of financial markets and how they operate. Additionally, you should have the capability of dealing with stock analysts, media personnel, bankers, lawyers, accountants, fund managers, and institutional investors. IPRs should also have a working knowledge of public affairs, local politics, and a comprehensive perspective of national issues and their impact. Typically, they would also have an understanding of the regulations and requirements of different exchanges. This knowledge helps to assure that the rules of disclosure are strictly adhered to.
The Practice of Investor Relations in SingaporeWith the establishment of the Association of Investor Relations Practitioners (http://www.airpap.com/) (AIRP) in Singapore, it is evident that the industry is in fact growing. One of their objectives is to foster best practices and enhance ethical and professional standards in the practice of investor relations. To ensure a minimum standard of new entrants into this industry, the AIRP will certify candidates that have successfully completed the Certified Practitioner of Investor Relations (CPIR) Programme. This six-month programme, offered by APEC Business Exchange (http://www.apecbizex.com/), will equip candidates with practical knowledge of finance, communications, and marketing that is required of an IRP. In addition, certified candidates who join the AIRP will be able to attain international portability as the AIRP is a member of the International Investor Relations Federation (http://www.iirf.org), headquartered in London.
How to become an Investor Relations Practitioner?As IRPs need more than one area of expertise, not many programmes in the market are adequately equipped to train IRPs. Currently, the only programme available to equip graduates with the necessary skills and practical knowledge is the Certified Practitioner of Investor Relations (CPIR) Programme, conducted by APEC Business Exchange. Upon successful completion of the Programme after passing the CPIR examinations, the Association of Investor Relations Practitioners will certify the candidate as a CPIR.
The CPIR ProgrammeThe CPIR Programme is a market-oriented programme taught by experienced practitioners and focuses on three disciplines, namely that of finance, marketing, and communications. Adopting an MBA-style of instruction, candidates will work on numerous case studies in groups, where they can experience the real-life challenges faced by IRPs everyday.
ConclusionBecoming a successful IRP is not difficult but it requires hard work, lots of networking, and a good understanding of how financial markets work. But in the long run, even experienced IRPs will have to keep up with the development in the industry as it is an extremely dynamic one and you can expect a lot of new developments in the years ahead.